Home Property Rising interest rates see 90% of landlords increasing rent

Rising interest rates see 90% of landlords increasing rent

by LLP Finance Reporter
21st Oct 22 1:03 pm

According to the results of a new survey by SME and landlord insurance provider, Superscript, nine in ten landlords who responded have either already increased rents, or intend to increase rents, due to the Bank of England interest rate rise.

The survey of 600 UK residential landlords showed that 50% of respondents already increased rents on their leased properties following interest rate rises earlier on in the year, with half of these intending to put rent up again.

Meanwhile, 40% of respondents said that while they haven’t yet put up rent, they intend to do so if the BoE increases interest rates further.

70% of these landlords said that they took this decision because it is the only way they are able to afford the increase in their mortgages resulting from the base rate rise. With more than half a million landlords already facing rent arrears due to a combination of the cost-of-living crisis and the collapse of housing support for tenants, this represents an affordability crisis for landlords across the UK.

It is further emphasised by the fact that 58% will have to seriously consider selling their leased property (or properties) should interest rates increase further.

Despite the financial pressures, landlords – 37% of which can be said to be ‘accidental’, i.e. they became a landlord due to unexpected circumstances – are willing to work with tenants. 50% of landlords surveyed indicated they would consider freezing rent should the tenants request to do so due to financial strains. Indeed, recent research by Shawbrook Bank suggested that one in twelve tenants have already had their rent reduced.

Cameron Shearer, CEO and Co-Founder of Superscript, said, “Landlords, like everyone else, are feeling the squeeze of the cost-of-living crisis.

“While Superscript’s research shows that a large majority of landlords are willing to help their tenants in the short term with rent freezes or reductions, this is not financially sustainable for most landlords. If mortgage rates climb too high many will have to confront the choice of last resort, either increasing rents or selling property.

“With a shortage of rental supply, neither of these choices benefits the housing ecosystem, in which responsible landlords are a crucial and undervalued element.”

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