Three quarters (75%) of buy-to-let landlords have said they have either increased rents during the past year (40%) or intend to do so in the near future (35%), as a result of rising costs.
In a survey of more than 1,000 landlords by the Deposit Protection Service (DPS), almost three quarters (72%) of landlords agreed that keeping rents in line with their local rental market was an influential or a very influential factor in their decision to increase letting prices.
Key reasons for these rent rises included increasing costs relating to legislation and compliance (68%) and increased maintenance costs (62%).
Managing director at the DPS, Matt Trevett, 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.”
Over half (55%) stated that rent rises were necessary because of increasing risks, for example, the abolition of no-fault evictions.
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.
Managing director at Zephyr Homeloans, a specialist BTL lender, also owned by the Computershare group, Paul Fryers, added: “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.
“It seems interest rates and broad market pressures have been more decisive in the trend along with inflationary pressures on maintenance costs.”
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