A significant proportion of landlords are implementing rent rises in the face of increasing costs, according to new research.
A survey of more than 1,000 landlords by The Deposit Protection Service (The DPS) reveals that three quarters (75%) of respondents planning to remain in buy-to let during the next few years have either increased rents during the past 12 months (40%) or are planning to do so in the near future (35%).
Matt Trevett, Managing Director at The DPS, said: “Demand for rental property remains high, and our survey suggests most landlords see a future in the rental market.
“However, landlords have also told us that their costs have increased recently, particularly as a result of higher interest rates – and it seems a large proportion are raising rents to cover their expenses.
“Clearly increases to interest rates and the cost of living will also be affecting some tenants, and we’d encourage both renters and landlords to have an open and constructive dialogue about financial pressures in the current economic climate.”
Almost three quarters of landlords (72%) agreed that keeping rents in line with their local rental market was an influential or very influential factor in their decision to increase letting prices.
68% said that increasing costs relating to legislation and compliance were a key factor in their decision, with 62% mentioning increasing maintenance costs, and 55% saying rent rises were necessary because of increasing risks, for example the proposed abolition of no-fault evictions (Section 21 notices).
More than half (54%) said that the requirements of mortgage lenders, such as financial stress testing and affordability requirements, did not influence their decision, with 53% saying that increasing costs of letting agents did not affect their thinking either.
Paul Fryers, MD at Zephyr Homeloans, commented: “It’s interesting to note that, although there is a perception that costs associated with securing a mortgage and using a letting agent have increased, most landlord survey respondents do not think those costs affected their decision to increase rents.
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