Over two thirds (68%) of landlords are planning to raise rents if their mortgage rate goes up when they come to remortgage, new research from Landbay has indicated.

According to data from the specialist buy-to-let (BTL) lender’s latest quarterly survey, 44% of landlords are expecting to increase rent in the coming year by 6-10% if their mortgage rate increases.

Of those who intend to raise rents, seven in 10 (70%) landlords also indicated they will do so for both new and existing tenants.

While 19% of respondents were still unsure about their plans, 13% did say they would not be applying any increases. The main reasons cited for this were strong rental yields and wanting to keep hold of good, longstanding tenants.

Managing director, intermediaries at Landbay, Paul Brett, commented: “While there’s no question mortgage rates have steadily improved in recent months, many landlords will still see a clear disparity when they come to remortgage. Much like private borrowers, landlords face a rate shock too, and for some, the only possible course of action is to pass this on to the tenant.

“However, with many of our respondents still reporting strong rental yields, there’s hope that landlords will be less inclined to raise rent. That’s especially true for those not looking to upset loyal and trusted tenants.”

Landbay’s findings, which surveyed 700 landlords, come as the Office for National Statistics (ONS) has reported that private rental prices paid by UK tenants increased by 4.2% in the 12 months to December 2022.

Within England, the East Midlands saw the greatest annual percentage change in private rental prices (5%), while in London prices changed by 4%.

“It’s certainly a challenging time in the BTL market and as part of our duty to our clients, we are always reviewing our product range and looking at ways to deliver a competitive advantage,” Brett added.

“After all, the rental sector plays an essential role in the wider housing mix in the UK. Landlords selling properties does no good for our housing sector as a whole, especially when demand continues to outstrip supply and high mortgage rates continue to push many to rent rather than buy.”

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