Landlords set to raise rents as costs increase

Landlords set to raise rents as costs increase

0:05 AM, 10th July 2024, About 2 weeks ago 29

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Landlords across the UK are planning to raise rents in the next year, with nearly 85% expecting to do so, research reveals.

A new survey by Landbay reveals a big shift from previous years, where rent rises were primarily driven by high demand for rented homes.

However, rising interest rates and operational costs are now the main factors behind rent hikes.

‘Higher interest rates and operating costs’

Rob Stanton, Landbay’s sales and distribution director, said: “Whereas before, rising rents would often reflect the increasing demand for good quality rental accommodation, today’s market now means landlords also have to factor in higher interest rates and operating costs too.

“With no alternative, many landlords have to consider increasing rent to cover their outgoings.”

He added: “As a large number of landlords look at their remortgage options, they can be encouraged by the innovation we have seen from lenders across the buy to let market.”

42% of landlords planning increases

The survey found that 42% of landlords planning increases manage portfolios of 4-10 properties.

Notably, a significant portion (16%) pay more than 13% of their rental income on property management fees.

Just under a third (30%) pay 5% of their rental income, while slightly fewer (29%) pay between 9% and 12%.

Landbay says that a third (36%) of landlords are looking to put up rents by up to 5%, and 37% are planning to increase by between 6-10%.

A smaller group of landlords (8%) say they are anticipating increases of 11-19%.


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Cider Drinker

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8:58 AM, 10th July 2024, About 2 weeks ago

All rents should rise every year. That’s how inflation works.

Rents should also rise to cover the additional costs imposed on landlords by government (S24, EICR, EPC, SDLT, CGT) and the Local Authority (Selective Licensing, 100% Council Tax when empty).

The supplier shouldn’t be absorbing the cost of supply. That’s for the customer (tenant) to fund.

John Farey

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9:55 AM, 10th July 2024, About 2 weeks ago

I agree with cider drinker, it's well overdue for someone to give a shout for landlord ever increasing higher costs, if the labour party have there way , ie, the ikes of angeia Rayner , us landlords will need to call it a day, it's not our fault the government can't build enough social housing, perhaps new rules should be put in place the building developers need to havecto provide a higher %of affordable housing, as that would help, here's johnny

Beaver

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10:11 AM, 10th July 2024, About 2 weeks ago

Reply to the comment left by John Farey at 10/07/2024 - 09:55
Rather than using their majority to run a left-wing-crusade against landlords the new labour government needs to think very carefully about imposing any additional new costs on landlords that don't do anything to benefit either landlords or tenants.

Making all landlords move from EPC band D to C for example would drive up costs and further drive out competition creating inflationary pressure on rents.

It would make more sense to allow landlords to rent any property, including those classified E, F and G, but change the EPC system to be meaningful. With a shortage of housing, shortage of rental properties and inflationary pressures on rents there is no point in driving competition out of the market and restricting choice for tenants.

The new labour government also needs to learn from the SNP failure in Scotland and understand that rent controls will lead to landlords maximising rents for each new tenant, rather than holding rents down to encourage longer term tenancies.

Reluctant Landlord

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10:40 AM, 10th July 2024, About 2 weeks ago

ALL LL's at the barest min should be increasing rents to actual current market levels as soon as possible and plan to do this every year, year on year.

Even if you have worked out you don't need the increase, formally increase it anyway. There is nothing stopping them continuing to pay what they do now, but you have a useful build up of ' formal rent debt' incurred.

Irrespective of if you ever intend to chase them for it or not, it is a formal log. If S21 is obliterated and S8 has to be used, you now have a mandatory ground oven ready (especially if they scrap the mandatory 'to sell' ground and make it 2 years notice)

Again you may not need to use this, but the potential is there IF you do and all PRS LL's not MUST be working out what the best way is of making sure you can get as swift a possession as you can IF NEEDED.

Beaver

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10:51 AM, 10th July 2024, About 2 weeks ago

Reply to the comment left by Reluctant Landlord at 10/07/2024 - 10:40At the moment this is correct because everything else in the marketplace is driving up costs and risk. For a small landlord it used to be good advice not to be overly aggressive on rents in order to encourage longer term tenancies....and that was the advice my agent gave me. If there is any suggestion of rent controls coming in though the only good advice that anybody can give a landlord is to put rents up while you can just in case somebody prevents you from doing it later.
John Farey is also correct that it is not the fault of private landlords that the government cannot build enough social housing. There is a bit of news here....
https://www.standard.co.uk/news/london/affordable-housing-london-section-106-homes-associations-crisis-barratt-g15-b1169705.html
....that says that affordable homes are being built in London with nobody to buy them because housing associations cannot afford them. The PRS could take them although the PRS will have to put rents up...especially in London. But if nobody can buy developers cannot build and without investment in a healthy PRS there is no way that labour can meet their housing commitments. They have not got the money.

JB

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11:35 AM, 10th July 2024, About 2 weeks ago

Maximise rents now while you have the chance. Gone are the days of generosity to tenants, we're now in survival mode.

Incidentally, the NRLA told me the 2 year requirement before selling (as planned previously) referred to the tenant being in occupation for 2 years, not 2 years from the start of a new tenancy

Beaver

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11:37 AM, 10th July 2024, About 2 weeks ago

Reply to the comment left by JB at 10/07/2024 - 11:35
I'm sorry...didn't quite understand this one 🙂

Would you like to clarify?

Cider Drinker

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11:40 AM, 10th July 2024, About 2 weeks ago

Affordable Housing.

We often hear that developers need to build affordable housing as part of their planning application. So, how does that work.

1. Does the developer use inferior materials and unskilled labour to keep the build cost down?

2. Does the developer provide homes of a similar quality to others on the development simply at a cheaper price?

When an affordable home is subsequently sold the people that benefitted from it being an affordable home, do they have to sell below market value at an affordable price? If not, that affordable house is lost.

It would, perhaps, be better if developers pooled their affordability housing liabilities such that a new council estate could be built - potentially in a cheaper area - by using the funds gathered from a number of private developments. These homes should be excluded from Right to Buy to preserve their affordability status.

Of course, we shouldn’t all expect to be able to afford to live in any part of the country of our own choosing. Being born in an expensive area doesn’t come with a right to live there ad infinitum. Likewise, being born in a poorer area doesn’t come with a commitment to never move.

If people can’t afford to buy, maybe they should look at their career choice.

BillyC

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13:55 PM, 10th July 2024, About 2 weeks ago

For every new modern development that you see across the London skyline, the local authority takes a substantial sum from the developer with the reasoning that we need affordable housing and not more luxury apartments.

It's like a legal bribe almost. What do they do with all this money? Isn't it supposed to go towards building affordable housing?

Reluctant Landlord

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14:02 PM, 10th July 2024, About 2 weeks ago

Reply to the comment left by JB at 10/07/2024 - 11:35
so you mean T had to have been in occupation for min 2 years before you can issue then with the (proposed/new ) S8, rather than the 2 years being the NOTICE period you had to give T in order to have the 'right' to start possession proceedings.

Makes more sense, but all this shows is that there is no proper clarity with any of this as yet...posed, planned or expected so really we are all still in the bloomin' dark.

Agree TOTALLY though with the situation now turning to 'survival mode' . That is not going to change unless all this is resolved, and even then its based on trust...which is I suggest broken beyond repair now.

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