More than one in four (27%) landlords are planning to increase the rent they charge tenants by more than 3% in 2015 – triple the latest rate of inflation for the UK.
A further 13% of landlords said they would raise their rents in 2015, but by less than 3%. Buy-to-let investors are expected to see their costs increase, with markets pricing in a rise in the Bank Rate in the second half of 2015 which would increase mortgage costs.
The data from flat and house share site Spareroom.co.uk is a blow to “Generation Rent” who are already facing high rental costs, particularly in the capital.
In London, the average room rent has increased annually by 4%, to £704 a month, up from £676 a year ago.
The average UK rent for a double room in shared accommodation has risen by 8% in the past year to £546 a month – up from £505 the previous year.
If rents rise by 8% again next year, the increase to tenants would be £44 a month. More than half of just under 3,000 tenants surveyed in a separate poll said they would be forced to find alternative, cheaper accommodation if their rent increased by up to £40 a month.
But finding new accommodation has become increasingly difficult in today’s rental market. According to a recent report by Sequence, an estate agent, demand for rental properties across Britain has grown by 18% on an annual basis, with seven potential tenants chasing every new property on the market.
The issue is particularly problematic in London, where tenants are sacrificing their living rooms for an extra bedroom in order to bring the rent down. The study suggested 17% of all sharers in London inhabit the same room, while 5% share the same bed, in a bid to save money.
Matt Hutchinson, director of SpareRoom, said: “While the majority of landlords do all they can to hold on to good, reliable tenants, those facing increased mortgage repayments when interest rates rise may have no choice than to cover the extra cost by passing it on to their tenants.
“That could have serious implications for a rental market already reaching crisis point, and there’s no contingency plan.”
|Landlords: What do you plan to do with rents in 2015?||Response|
|Raise by more than 3%||27%|
|Raise by less than 3%||13%|
|Keep the same||55%|
|Lower by less than 3%||2%|
|Lower by more than 3%|