Most landlords will raise rents if mortgage costs rise

Most landlords will raise rents if mortgage costs rise

0:01 AM, 27th July 2023, About 10 months ago

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Most landlords – 61% – said they would raise rents to meet rising mortgage costs, a survey reveals.

The study from Landbay, also revealed that nearly two out of 10 BTL landlords (18%) will not increase rents and 21% say they are unsure about their course of action.

However, over the last 12 months, 76% of landlords admitted to raising rents, with half of them (51%) citing escalating mortgage costs as the main reason.

A quarter of landlords (24%) revealed that they were influenced by their letting agent’s advice in making this decision.

‘No alternative than to put the rent up’

Landbay’s managing director of intermediaries, Paul Brett, said: “Many landlords, whose mortgage interest rates are increasing, find themselves in the position of having no alternative than to put the rent up in order to cover their outgoings.

“Mortgage costs obviously play a big part in landlords’ expenditure and there is a lot of remortgage activity this year.

“In fact, we are seeing more landlords opting for two-year terms.”

Landlords cited various reasons for rent hikes

Apart from mortgage expenses, landlords cited various reasons for rent hikes, including the need to cover maintenance and repairs, increased taxation or energy bills.

Some landlords also mentioned an annual rent increase as part of their regular practices.

The research also highlights that 38% of respondents said they would raise rents by between 6% and 10%.

And 27% of landlords said they would cap their rent increments at a maximum of 5%.

For landlords not putting rents up, they said their rental income adequately covers their mortgage and other expenses.

However, others admitted to operating at a financial loss but were willing to take the hit to retain their good tenants.

Some landlords have also chosen to delay rent increases for as long as possible.

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