The private rented sector is facing unprecedented pressures as UK landlords hike rents and tighten their selection criteria in response to rising costs. According to a report from Handelsbanken, 63% of professional landlords have already increased rent, while 59% are tightening tenant checks due to the impending impact of the Renters' Rights Act.
Costs associated with borrowing, maintenance, insurance and compliance continue to escalate, driving up rental prices. Landlords polled by Handelsbanken cited maintenance and repairs (45%), insurance (41%) and energy efficiency improvements (40%) as key cost pressures. The average estimated cost for landlords to comply with the Renters' Rights Act was £31,411, with a median of £5,000.
These rising expenses are having a significant impact on investment decisions, with one in five landlords selling properties due to escalating costs and 19% removing them from the rental market altogether. Concerns also exist about investment in existing housing stock, with 46% of landlords delaying upgrades or improvement works.
The report suggests that despite these challenges, professional investors remain confident in the sector. A notable 84% plan to increase their portfolio holdings over the next year, driven by perceived buying opportunities (70%), strong rental demand (58%) and financing availability (33%). Almost all respondents anticipate their portfolio value will rise, with 38% expecting a significant increase.