Interest rate hikes drive rent increases

Nine in ten landlords have or intend to increase rents to claw back the cost of interest rate rises.

This is the conclusion of landlord insurer Superscipt after surveying 600 UK residential landlords.

Half of those surveyed had already increased rents in response to interest rate rises earlier this year. And half of these landlords said they intended to rents up again.

Of the landlords who had so far not raised rents, 40 per cent said they would have to do so if interest rates continued to rise. Some 70 per cent of this group said it would be the only way they would be able to afford increased mortgage costs.

With an estimated 500,000 landlords already facing rent arears ‘this represents an affordability crisis for landlords across the UK’, said Superscipt. ‘It is further emphasised by the finding that a majority (58 per cent) will have to seriously consider selling their rental properties should interest rates increase further’.

In the meantime, half of landlords surveyed indicated they would consider freezing rents should tenants request this due to financial strains.

‘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’, said Superscript chief executive Cameron Shearer. ‘If mortgage rates climb too high many will have to confront the choice of last resort, which is either to increase rents or to sell 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’.