Landlords are raising rents and becoming more selective about tenants as operating and regulatory costs increase, according to new research from Handelsbanken. The bank's fifth annual Property Investor Report, which surveyed 200 UK property investors, landlords, and property management professionals, found that 63% had increased rents due to higher overall costs.
In response to the Renters' Rights Act, 59% of landlords stated they were tightening their selection criteria, while 44% were considering increasing rents earlier than planned. Handelsbanken's chief economist, James Sproule, noted that the private rented sector is becoming more selective, with higher costs and greater tenant rights influencing rent decisions and how professional investors assess tenant risk.
Maintenance and repairs were the most frequently reported cost increase over the past 12 months, cited by 45% of respondents. Insurance costs had risen for 41%, and 40% pointed to spending on energy efficiency improvements. The median cost for complying with the Renters' Rights Act was reported as £5,000, with a mean of £31,411.
Some landlords are also delaying property improvement work, with 46% reporting this. Despite some sales and withdrawals from the private rented sector due to rising costs, 84% of investors surveyed intend to increase the size of their property holdings in the next 12 months.