Not all landlords pass higher costs on to tenants

A survey by a finance firm suggests not all landlords are passing their higher mortgage costs on to tenants.

Octane Capital has compared the average rent for a new tenancy and a BTL mortgage with a 40 per cent deposit.

Across Britain mortgage rates have risen by 13 per cent year-on-year, outstripping rental price growth of 9.9 per cent.

This is closing the gap between mortgage and rental payments, as mortgage costs now average at £982 per month, compared to £1,1068 for rents.

Mortgages have risen at more than double the rate of rents in Yorkshire and the Humber and the North East, signalling that landlords are feeling the pinch the most in those regions.

In Yorkshire mortgage payments have surged by 15.2 per cent year-on-year to £712. Over the same period rents have risen by 7.4 per cent to £826 - so the gap is closing between the two.

Similarly in the North East mortgage rates have increased by 15.4 per cent to average at £547 per month. This compares to a rental price increase of 7.6 per cent, bringing it to £636 per month.

London doesn’t tally with the general trend, as rents have increased by 12.9 per cent year-on-year, exceeding a 11.4 per cent increase in mortgage payments.

As a result the capital’s tenants have to fork out £2,109 per month for a new tenancy, which far exceeds average mortgage repayment costs of £1,789.

In Scotland the government’s policy of controlling rents on existing tenancies appears to be having the opposite effect for new tenancies, which are 15.8 per cent more expensive annually at £973 per month, a bigger percentage increase than any other region.

This compares to mortgage costs of just £643 per month north of the border, after rising by 12.4 per cent year-on-year.

Octane chief executive Jonathan Samuels says: “While landlords are often blamed for ramping up rents, in many cases buy-to-let mortgage costs are rising faster than the cost of new tenancies.

“This is particularly the case in Yorkshire and the Humber and the East Midlands, where the markets clearly don’t allow landlords to recover all their higher outgoings in the form of rents.

“This year has undoubtedly been a tough one for landlords and renters - as neither has been able to escape rising costs.”

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Tricia Urquhart
12 October 2023 08:04 AM

Jo's in depth comment shows how complicated the issue of rent rises can be & that LLs are often very thoughtful about the whole process, not just fleecing tenants as the tenant groups believe. I have always tried to put rents up by a similar amount each year, so tenants know what to expect. Sometimes MV get a bit ahead, but then we usually catch up in the next year or two, or with a new tenant. Its all about managing the business fairly.