Landbay’s quarterly landlord survey sheds light on landlords’ opinions on raising rent to cover higher mortgage costs.
Some 60% of BTL landlords said they would raise rents for their tenants if their own mortgage rate increases when they come to remortgage.
Two out of 10 landlords (21%) were unsure what to do and a further 18% said they would not raise rents.
Over the past year, three quarters (76%) of landlords said they have raised rents with the main reason cited by half of them (51%), being to cover higher mortgage costs.
Nearly a quarter of landlords (24%) said they raised rents on the advice of their letting agent.
Other reasons were to cover maintenance and repairs, an increase in taxation or energy bills, while some landlords always raise rents once a year.
The most likely rent increase — according to 38% of respondents — is between 6% and 10%, while 27% said they would only increase the rent by up to a maximum of 5%.
The landlords who are not raising rents at the moment said they don’t need to, as their rental income covers their mortgage and other outgoings.
However, some have said they are out of pocket but have taken the hit because they don’t want to lose good tenants.
Paul Brett, MD of intermediaries at Landbay, commented: “Many landlords whose mortgage interest rates are increasing, find themselves in the position of having no alternative than to put the rent up in order to cover their outgoings.”
“Mortgage costs obviously play a big part in landlords’ expenditure and there is a lot of remortgage activity this year.
“In fact, we are seeing more landlords opting for two-year terms, which is why we have also launched two-year discounted trackers with no ERC.
“Borrowers can leave their options open with the opportunity to move onto another product at any time if mortgage rates improve.”
