Almost half of UK buy-to-let landlords plan to increase rents in anticipation of the Renters’ Rights Bill, according to new data from specialist lender Landbay.
The survey found that 44% of landlords intend to raise rents specifically in response to the forthcoming legislation. On average, these landlords expect to increase rents by 6%, equating to an additional £74 a month – a rise that significantly outpaces the current 3.6% rental inflation reported by the Office for National Statistics.
Landlords with mid-sized portfolios appear most likely to respond to the legislation with rent increases. Among those planning rent hikes, 32% own between four and 10 properties, while 28% hold between 16 and 30.
Regionally, properties in the South East are expected to be most affected, followed by the North West.
LEGAL RESTRICTIONS
The Renters’ Rights Bill, which forms part of the government’s broader rental reform agenda, will restrict landlords to one rent increase per year, based on prevailing market rates.
Tenants will have the right to challenge any rise they believe exceeds market value through a first-tier tribunal. The legislation also proposes the abolition of Section 21, which currently allows landlords to end tenancies without providing a reason.
Landbay’s survey highlights widespread concern among landlords over this change, with three-quarters expressing apprehension about losing the ability to evict problematic tenants without cause.
Rob Stanton, sales and distribution director at Landbay, said: “This sharp rise in rents in the short term shows the unintended consequence of this new regulation, as landlords look to act now and pre-emptively raise rents in fear of future cost implications or difficulties, and to protect their investments.
“By forcing the hand of landlords in this way, there is a real risk of worsening the cost-of-living crisis that so many private renters are currently facing.”
PROTECTING RIGHTS
He added: “Any good and reasonable landlord will agree with protecting the rights of tenants, but they also believe that the rights of the property owner should be protected too.
“There’s no doubt we need to balance reform with support and safeguards for landlords to make sure that the rental market continues to play the important role it does in the UK’s housing mix.”
The new data also reveals that 89% of landlords expect to increase rents within the next year, regardless of the Bill. Over a third anticipate rises of between 3% and 10%, while just 11% said they have no intention of increasing rents.
Landbay says it will continue to focus on ensuring that its product range meets landlord needs in a shifting policy environment. As Stanton concluded, “While we may not be able to influence government policy or regulation, our role as a buy-to-let lender is to ensure our product range is competitive and delivers exactly what landlords need – whether that’s for purchases or refinancing.”
