According to Landbay’s quarterly landlord survey, approximately 21 per cent of landlords were unsure what to do and 18 per cent said they would not increase rents for tenants if their own mortgage rates rose at remortgage.
The report continued that over the past year more than three quarters of landlords had increased rent, with over half citing higher mortgage costs.
Nearly a quarter said that they raised rents on the advice of a letting agent.
Other reasons cited for rent increases included covering maintenance and repairs, increase in tax or energy bills and some landlords said they increased rents every year.
Around 38 per cent of respondents said most likely rent increase ranged from six to 10 per cent and 27 per cent said they increase rent by a maximum of five per cent.
Landbay said that landlords who were not raising rents didn’t need to as rental income covered their mortgage and other outgoings.
However, some said they were out of pocket but had taken the financial hit as they wanted to keep good tenants, and others are delaying rent increases as long as possible.
Paul Brett (pictured), managing director, intermediaries at Landbay, said that many landlords whose mortgage rates were rising found themselves in the “position of having no alternative than to put the rent up in order to cover their outgoings”.
He continued: “Mortgage costs obviously play a big part in landlords’ expenditure and there is a lot of remortgage activity this year. Our latest product development of like-for-like two-year fixed rate remortgages will help landlords, as the stress test we have to apply for affordability is based on pay rate plus one per cent, instead of the more usual two per cent.”
Brett said that the firm was seeing more landlords opting for two-year terms, which led it to launch two-year discounted trackers with no early repayment charges.
“Borrowers can leave their options open with the opportunity to move onto another product at any time if mortgage rates improve,” he added.
