New research from investment firm Property Partner claims that landlords are planning to pass on higher costs to their tenants, in the form of rent price rises.
As the Government increases its efforts to protect both private tenants and first time buyers, the study highlights the difficulties that Government measures can actually cause renters.
The Government’s recent plans to ban fees charged to tenants, for example, were developed to protect the pockets of renters, but may not actually do so.
Although any efforts to aid tenants are welcomed, it appears that certain measures may not actually be to renters’ benefit.
The research from Property Partner found that 37% of landlords might have to increase the rent prices they charge to account for higher taxes caused by Government changes. A quarter are also looking to pass on costs due to higher rates of Stamp Duty charged on additional property purchases.
On average, landlords who’ve increased rents in the past 18 months have done so by 21% to compensate for the changes to buy-to-let taxes.
Tenants are also facing further upwards pressure on rents due to increases in interest rates. Along with the buy-to-let specific changes, landlords reported that their most likely reason for raising rents would be to offset higher interest rates.
Over a third (38%) would consider increasing rents to compensate for higher rates. Following the first rate rise above 0.5% in a decade in August, tenants may start to feel the pinch as costs are passed on.
Mark Weedon, the Head of Research at Property Partner, comments: “The Government wants to protect renters and is increasingly recognising the crucial role of the rental sector within the wider housing market. It is ironic then that the Government’s own initiatives are forcing landlords to pass on costs to tenants, impacting those who choose to rent, and making it harder for those with ownership ambitions to save for a hefty deposit.”
Robin Foxhall, a buy-to-let investor, also gives their thoughts: “I’ve invested in buy-to-let properties for a long time and always acted in the best interests of my tenants. The recent tax changes crackdown puts me off of pursuing new investments in buy-to-let, and may well force me into a corner where increased costs lead to increased rents for tenants. I don’t want to put rents up, but sometimes external factors leave you with no choice.”
During times of higher costs and tighter regulations on landlords, we urge you to consider how you are protecting your investment. If you’ve not heard of or thought about Rent Guarantee Insurance before, you should look into how this peace of mind cover can benefit you.
We have a helpful page on our website to give you all the information you need: https://www.justlandlords.co.uk/rentguaranteeinsurance