The cost of renting a home in the UK is increasing. According to new reports, rental costs have increased un-proportionately in relation to the overall cost of inflation. Sources suggest that due to an exceptionally strong rental market landlords are able to raise the cost of rent for existing tenants at the time of contract renewal. Landlords are also further increasing rent for new tenants and are constantly increasing the scope of their portfolios.
Inflation has increased by around 1.0 percent in the last 3 months, however rental prices have rose by around 6 per cent as a national average. In monetary terms the increase equates to an additional £650 per year on top of existing agreements.
Around 1/3rd of landlords have stated a need to increase rental costs in order to combat increased interest rates, and around 1 in 10 intend to further increase their portfolios in 2007. Just shy of half of all surveyed landlords state they have not reacted in any way to interest rates, but have not ruled out the possibility.
Accordingly, the majority of active BTL investors have not been deterred by increased borrowing rates. This could be due to the fact that many BTL investors do not require substantial borrowings in order to fund new property purchases. Of those surveyed, the majority only require a home loan to fund 50 percent of the purchase, with the remainder funded through a combination of equity and savings.
