Recent data suggests a trend among landlords – they’re closely observing each other. When one landlord hikes up the rent, others in the vicinity might follow suit. This could be termed as a ‘snowball effect’. The DPS’ research provides insight into this trend: 72% of landlords say that aligning rents with the local rental market’s prevailing rate played an influential role in their choice to increase letting prices.

Legislative and Compliance Costs

It’s not just about keeping up with the Joneses. Landlords face a myriad of operational expenses, and for 68% of them, rising costs due to legislative and compliance requirements have also driven them to hike rents.

Maintenance Costs Are on the Rise

Maintaining a property isn’t cheap, and for 62% of landlords, increasing maintenance costs factored into their decision to adjust rents upward.

Words from the Experts

Matt Trevett, who heads The DPS, shared his insights into the current state of the rental market. Demand for rental property remains robust, and many landlords are optimistic about the rental market’s future. However, they’ve also highlighted rising costs, especially with the recent uptick in interest rates. These increased costs seem to be a significant reason behind the rising rents, as landlords try to balance their expenses.

Trevett also emphasised the importance of open communication during these times. Both tenants and landlords are grappling with the challenges of higher interest rates and living costs. A collaborative dialogue about the prevailing financial pressures could lead to better understanding and solutions.

Factors That Aren’t Influencing the Rise

Interestingly, not everything we might suspect influences landlords’ decisions to increase rents. For instance:

• Mortgage Lender Requirements: Over half (54%) of landlords stated that factors like financial stress testing and affordability checks imposed by mortgage lenders did not drive their rental price decisions.
• Letting Agent Costs: Similarly, 53% said that rising costs from letting agents weren’t a primary concern influencing their decision to increase rents.