A survey of 1,000 landlords compiled by The Deposit Protection Service (DPS) revealed that three quarters of those asked, who plan to remain in buy to let over the next few years, have either increased rents during the past 12 months or are planning to do so in the near future.
Almost three quarters of landlords (72 per cent)agreed that keeping rents in line with their local rental market was an influential or very influential factor in their decision to hike letting prices. More than two-thirds (68 per cent) said that spiralling costs over legislation and compliance were key factors in making that decision.
A further 62 per cent mentioned that maintenance costs were a reason behind rent rises, and 55 per cent said that rate hikes were necessary because of increasing regulatory risks.
More than half of respondents said that the requirements of mortgage lenders, such as financial stress testing and affordability requirements were not part of their decision. A total of 53 per cent also said that the increasing costs of letting agents did not affect their thinking either.
High demand for rental properties
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.”
Paul Fryers, managing director at specialist buy-to-let lender Zephyr Homeloans, 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.”
