Majority of landlords plan to increase rent when remortgaging
Almost seven in ten (68%) landlords plan to raise rents if their mortgage rate goes up when they come to remortgage, new data from the Landbay quarterly survey can reveal.
In the coming 12 months, 44% of landlords said they expect to increase rent by 6-10% if their mortgage rate increases. Of those who intend to raise rents, 70% will do so for both new and existing tenants.
While 19% of respondents were still unsure about their plans, 13% said no to any increases. The main reasons against were strong rental yields and wanting to keep hold of good, longstanding tenants.
The findings come as the ONS reports private rental prices paid by UK tenants rose by 4.2% in the 12 months to December 2022. Within England, the East Midlands saw the greatest annual percentage change in private rental prices (5%), while in London prices changed by 4%.
Increasing rent is just one of the topics tackled by Landbay’s latest quarterly survey, which aims to uncover the key challenges facing existing landlords and reveal their thoughts on the future of the buy-to-let market.
Paul Brett, managing director, intermediaries at Landbay said: “While there’s no question mortgage rates have steadily improved in recent months, many landlords will still see a clear disparity when they come to remortgage. Much like private borrowers, landlords face a rate shock too, and for some, the only possible course of action is to pass this on to the tenant.
“However, with many of our respondents still reporting strong rental yields, there’s hope that landlords will be less inclined to raise rent. That’s especially true for those not looking to upset loyal and trusted tenants. Nonetheless, it’s certainly a challenging time in the buy-to-let market and as part of our duty to our clients, we are always reviewing our product range and looking at ways to deliver a competitive advantage.
“After all, the rental sector plays an essential role in the wider housing mix in the UK. Landlords selling properties does no good for our housing sector as a whole, especially when demand continues to outstrip supply and high mortgage rates continue to push many to rent rather than buy.”