Interest rate hikes sees nine out of 10 landlords increasing rents

Interest rate hikes sees nine out of 10 landlords increasing rents

12:09 PM, 24th October 2022, About a month ago 1

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Rising interest rates have seen nine in 10 landlords either increasing rents or are about to, research reveals.

The findings from SME and landlord insurance provider, Superscript, questioned 600 UK residential landlords and found that 50% of respondents have already increased rents following interest rate rises earlier in the year.

And half of these landlords admit they are intending to put their rent up again.

Meanwhile, 40% of respondents said that while they haven’t yet put up rent, they intend to do so if the Bank of England increases interest rates further.

Only way they can afford the increase in their mortgages

Seven in ten (70%) of these landlords said that they took this decision because it is the only way they can afford the increase in their mortgages resulting from the base rate rise.

With more than half a million landlords already facing rent arrears due to a combination of the cost-of-living crisis and the collapse of housing support for tenants, this represents an affordability crisis for landlords across the UK.

Also, 58% of landlords say they will have to seriously consider selling their property, or properties, should interest rates increase further.

Despite the financial pressures, landlords – 37% of which can be said to be ‘accidental’, i.e. they became a landlord due to unexpected circumstances – are willing to work with tenants.

Half (50%) of landlords surveyed indicated they would consider freezing rent should the tenants request to do so due to financial strains.

‘Landlords are feeling the squeeze’

Cameron Shearer, the chief executive, and co-founder of Superscript, said: “Landlords, like everyone else, are feeling the squeeze of the cost-of-living crisis.

“While Superscript’s research shows that a large majority of landlords are willing to help their tenants in the short-term with rent freezes or reductions, this is not financially sustainable for most landlords.

“If mortgage rates climb too high, many will have to confront the choice of last resort, either increasing rents or selling property.”

He added: “With a shortage of rental supply, neither of these choices benefits the housing ecosystem, in which responsible landlords are a crucial and undervalued element.”



Comments

Emma Hayes, MD - Platinum Property Partners

15:03 PM, 24th October 2022, About a month ago

We've seen rent increases across the Platinum network to contribute towards the rising cost of delivery (our network generally operate an all inclusive model) and so far, demand has remained incredibly high for great rooms in shared housing. Having said this, as highlighted in the above, it shouldn't be overlooked the strain the rising costs and S24 tax changes have on the PRS as a whole with BTL landlords and ultimately renters being most painfully impacted. As a country, we need a wide variety of quality housing and a government which understands this. The final comments about responsible landlords being undervalued as contributors to the housing supply is spot on - lots of opportunity to improve!

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