Government measures are among the top causes for landlords increasing rents, according to research from Property Partner.
The government is increasing its efforts to safeguard tenants, including calling an end to letting fees and publishing a new series of online rental guides. However, the study shows that not every measure will benefit tenants.
In fact, it shows that 37% of landlords may have to up rents to account for higher taxes caused by the government’s buy-to-let rule changes, with a quarter looking to pass on costs due to high stamp duty paid when purchasing a buy-to-let property.
Tenants are also at risk of facing further upward pressure on rents due to recent increases in interest rates. Landlords reported that their most likely cause of increasing rents would be to offset interest rates.
Over a third (38%) would consider increasing rents to compensate for higher interest rates. Tenants may feel the pinch as costs are passed on after the first rate rise above 0.5% in a decade was seen in August.
“The Government wants to protect renters and is increasingly recognising the crucial role of the rental sector within the wider housing market,” said Mark Weedon, head of research at Property Partner.
“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, added: “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.”