Buy-to-let landlords likely to increase rents to offset higher costs

There are growing fears that tenants will end up bearing the cost of the government’s decision to ban letting agents' fees to tenants, with fresh research revealing that buy-to-let landlords will be left with no alternative but to pass extra charges onto tenants if they are required to pick up the cost of tenant fees.

A new survey from online letting agent Upad found that 40% of landlords plan to increase rents if they are charged fees for a range of administration, including reference, credit and immigration checks, as well as the drawing up of tenancy agreements.

According to the charity Citizens Advice, the fees currently cost tenants an average of £337 per person, but the proposed changes announced by the chancellor Philip Hammond in his Autumn Statement could see these charges shift to landlords.

Only a third of the respondents questioned said that they would definitely not raise their rents, meaning that potentially two-thirds of tenants, or up to 2.6 million renters, could face a permanent increase in rent as a direct result of last week’s announcement.

The research also revealed that 75% of buy-to-let investors have no plans to sell their properties, despite a barrage of charges inflicted on landlords over the last year, including the introduction of the stamp duty surcharge in April, the scrapping of the 10% Wear and Tear tax relief for landlords who rent out furnished homes, while mortgage tax relief is set to be phased out from next year.

James Davis, CEO and founder of Upad.co.uk, commented: “Once again a measure that has been brought in to punish landlords has come home to roost.

“Due to the chronic housing shortage we face in the UK, the lettings market is under immense pressure and this attempt to help potential first-time buyers has actually done more harm than good.

“Instead of punishing landlords, we need to find ways to increase the supply of quality and affordable rental property to help house the millions of people who need it.  Frustratingly for everyone involved, this research suggests that landlords will be left with no choice but to further increase rent.” 

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