How are landlords tackling rising interest rates? How are landlords tackling rising interest rates?

We spoke to landlords to find out how increasing financial pressures are affecting the rate they charge tenants. Find out the results here.

How are increasing interest rates impacting landlords?

The current financial pressures faced by individuals and businesses alike mean most are reassessing their costs, and landlords are no different.

When the Bank of England moved to raise interest rates in September 2022 this had a direct impact on most mortgage holders. For landlords this has led to the difficult decision as to how to recoup the additional cost they are now incurring, with many considering passing the cost on to tenants by raising rents.

We spoke to residential landlords to understand how they were tackling increasing interest rates.

9 in 10 have either already increased rents, or intend to

Nine in ten residential landlords we spoke to have either already increased rents, or intend to increase rents, due to the Bank of England interest rate rise.[1]

50% of those asked have already increased rents on their leased properties following interest rate rises earlier on in the year, with half of these intending to put rent up again. Meanwhile, 40% of respondents said that while they haven’t yet put up rent, they intend to do so if the BoE increases interest rates further.

70% stated that increasing rent was the only way to afford their increased mortgage

Seven in ten (70%) landlords took the decision to increase how much rent they charge tenants because it is the only way they are able to afford the increase in their mortgages, resulting from the base rate rise.

With more than half a million landlords already facing rent arrears due to a combination of the cost-of-living crisis and the collapse of housing support for tenants, this represents an affordability crisis for landlords across the UK.

50% would consider freezing rent to support tenants

Despite the financial pressures, landlords - 37% of which can be said to be ‘accidental’, i.e. they became a landlord due to unexpected circumstances[2] - are willing to work with tenants. Half (50%) of landlords indicated they would consider freezing rent should the tenants request to do so due to financial strains. Indeed, recent research by Shawbrook Bank suggested that one in twelve tenants have already had their rent reduced.

Nonetheless a majority (58%) of landlords will have to seriously consider selling their leased property (or properties) should interest rates increase further.

Landlords, like everyone else, are feeling the squeeze of the cost-of-living crisis. While Superscript’s research shows that a large majority of landlords are willing to help their tenants in the short-term with rent freezes or reductions, this is not financially sustainable for most landlords. If mortgage rates climb too high many will have to confront the choice of last resort, either increasing rents or selling property. With a shortage of rental supply, neither of these choices benefits the housing ecosystem, in which responsible landlords are a crucial and undervalued element.

Cameron Shearer, CEO and Co-Founder, Superscript

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Sources & methodology

[1] The survey was conducted on a representative sample of 600 UK residential landlords by consumer research provider Attest on behalf of Superscript on the 30th September 2022.

[2] This figure was derived from a survey of 500 landlords in August 2022. In response to the question: what made you decide to become a landlord?, we combined the figures that indicated that becoming a landlord was due to unexpected circumstances - 29% said that they inherited a property, and 8% said it was after they moved abroad for work.

This content has been created for general information purposes and should not be taken as formal advice. Click to read our full disclaimer.

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