18% of 10 buy-to-let landlords said they would not raise rents for their tenants if their own mortgage rate increases when they come to remortgage, according to research undertaken by Landbay.
Meanwhile, 21% of landlords were unsure what to do and 61% said they would raise the rent.
Over the past year, 76% of landlords said they have raised the rent with the main reason, cited by half of them (51%), being to cover higher mortgage costs. 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 5% maximum.
For those landlords who are not raising rents at the moment, they don’t need to as their rental income covers their mortgage and other outgoings. However, some said they are out of pocket but have taken the hit because they don’t want to lose good tenants. Meanwhile, others are delaying the rental increase for as long as they can.
Paul Brett, managing director, intermediaries at Landbay, said: “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. Our latest product development of like-for-like two-year fixed rate remortgages will help landlords, as the stress test we have to apply for affordability is based on pay rate plus 1%, instead of the more usual 2%.
“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 early repayment charges. Borrowers can leave their options open with the opportunity to move onto another product at any time if mortgage rates improve.”
