You can’t open a newspaper (or app) without seeing something about the UK rental market. Whether it’s the increase in demand for property, changes to rent rules or landlords selling up – rentals are getting a lot of attention. And one matter that is causing a lot of controversy is the issue of rising rent. In a cost-of-living crisis, the increase in monthly rent is understandably worrisome for tenants, but are landlords really to blame? Owning investment property is a business, and for many full-time landlords, it’s their sole source of income. The same applies to one-off or accidental landlords, and with the economy in flux, price changes are inevitable. In this two-minute read, we explore three reasons rents are going up and why landlords aren’t just profiting off a volatile rental market. 1) Mortgage rates As interest rates go up, the mortgage market goes the same way. And just as residential mortgages get more expensive, so do buy-to-let mortgages. Landlords are facing the same issues as residential owners – their monthly payments have increased. While many people think that owning a rental is an easy way to rake in cash, it’s a business model that only creates profit if the rental income covers the mortgage payment and there’s money left over. If mortgage payments are going up, then rising rents may reflect a landlord’s increase in costs. 2) Changes to tax rules Without getting into the nitty gritty of UK tax law, over the last few years, there have been lots of changes introduced which impact landlords. This includes the amount they can claim in expenses and how much tax they pay. These changes have not only caused many landlords to sell their rental properties but may have also forced rent increases to meet financial obligations. 3) Increased costs of repairs and maintenance Landlords often pay for the upkeep of their properties through their rental income, and the following issues could be affecting the rent they charge: • A general increase in the cost of labour and materials, fixtures and furnishings. • With purpose-built flats, owners often have to pay service charges or ground rents to the freeholder, many of which have increased due to the rising energy costs. Communal heating, lighting and refuse collection will currently be more expensive. • In the next few years, all rental properties must meet an increased level of energy efficiency, so many landlords will have to undertake major works, which again, could impact rent. If you’re a landlord looking to rent out a property or a tenant looking for a new home, contact The Chelmsford Property Experts. Our lettings team is ready to help.
The UK rental market has been a hot topic in recent times, with numerous articles and reports highlighting various issues, including the increasing demand for property, changes to rent rules, and landlords selling up. However, one issue that is generating a lot of controversy is the rising cost of rent. While tenants are understandably concerned about the monthly increase, are landlords solely to blame?
Owning an investment property is a business, and for many full-time landlords, it is their primary source of income. The same applies to accidental or one-off landlords, and with the economy in flux, it is natural to expect price changes. In this two-minute read, we explore three reasons rents are going up and why landlords are not just profiting from a volatile rental market.
- Mortgage Rates
As interest rates go up, the mortgage market follows suit. Similarly, buy-to-let mortgages get more expensive, just like residential mortgages. Landlords face the same issues as residential owners – their monthly payments increase.
Contrary to popular belief that owning a rental property is an easy way to make money, it is a business model that can only generate profit if the rental income covers the mortgage payment and leaves room for more. Thus, if mortgage payments are increasing, landlords may have to raise rent to compensate for their additional costs.
- Changes to Tax Rules
Over the past few years, numerous changes have been introduced to UK tax law, which has impacted landlords. For example, the amount landlords can claim as expenses and how much tax they pay. These changes have led many landlords to sell their rental properties and may have forced others to raise rents to meet financial obligations.
- Increased Costs of Repairs and Maintenance
Landlords typically pay for the upkeep of their properties through their rental income, and several issues could be affecting the rent they charge:
• A general increase in the cost of labour and materials, fixtures and furnishings. • With purpose-built flats, owners often have to pay service charges or ground rents to the freeholder, many of which have increased due to the rising energy costs. Communal heating, lighting and refuse collection will currently be more expensive. • In the next few years, all rental properties must meet an increased level of energy efficiency, so many landlords will have to undertake major works, which again, could impact rent.
Whether you’re a landlord looking to rent out your property or a tenant searching for a new home, The Chelmsford Property Experts’ lettings team is available to assist.
