In a recent survey conducted by Landbay, it was found that a staggering 76% of buy-to-let landlords have increased their rental charges within the past year. The primary motivation behind this surge was attributed to the escalating burden of higher mortgage expenses.
Of those surveyed, over half (51%) pointed directly to the mounting pressure of mortgage payments as the driving force behind the decision to raise rents. Additionally, 20% of landlords mentioned that their letting agents had specifically advised them to implement rental hikes. A smaller segment, constituting 8% of respondents, highlighted property maintenance, repairs, and efforts to enhance Energy Performance Certificate (EPC) ratings as the reasons for the adjustments.
Looking ahead, should mortgage rates surge during future remortgaging, a substantial 71% of landlords indicated their inclination to further raise rents, while 21% remained uncertain. Only a meagre 8% expressed their intent to refrain from raising rents solely due to increased mortgage costs.
Regionally, disparities emerged in landlord responses. In the South (excluding London), a staggering 89% of landlords leaned towards raising rents, while in the North, the proportion was relatively lower at 62%. The Midlands positioned itself between the North and South, with 78% of landlords contemplating rent increases. Surprisingly, London exhibited a more conservative stance, with 65% of landlords considering raising rents and 10% unsure of their course of action.
For those contemplating rent hikes, the majority, 65%, proposed moderate increases of up to 10% in monthly payments. Specifically, 38% intended to raise rents by 6-10%, while 27% planned to cap the raise at 5%. Nevertheless, a significant 20% remained uncertain about their approach. Interestingly, 10% of landlords aimed to implement hikes exceeding 10%, while 5% declared their intention to abstain from raising rents altogether.
Commenting on the findings, Rob Stanton, Landbay’s sales and distribution director, acknowledged, “Higher mortgage rates during remortgaging are evidently a contributing factor to the surge in rent, as landlords are compelled to balance their expenses.”
Stanton further added, “For landlords who have refrained from or do not intend to raise rents, it typically stems from their low mortgage costs or their desire to retain longstanding and/or high-quality tenants.”
The survey shed light on a widespread trend among buy-to-let landlords, revealing a direct correlation between escalating mortgage expenses and the subsequent need to offset these costs through increased rental charges.