Half of landlords choose not to increase rents amid cost pressures

Half of landlords choose not to increase rents amid cost pressures

A recent survey reveals that 50% of private landlords in England have not raised rents in the past year, reflecting a cautious approach amid tenant cost-of-living concerns and rising landlord expenses.

New research by the TDS Charitable Foundation, surveying over 2,000 private landlords across England, found that half of landlords have kept rents unchanged over the last 12 months. This marks an increase from 39% the previous year, indicating a growing trend of rent stability despite inflationary pressures.

The decision to hold rents steady is largely driven by landlords’ desire to retain tenants and recognition of the financial difficulties many tenants face. Nearly half of those not increasing rents cited tenant retention as a key factor, while 44% expressed concern about tenants’ cost-of-living challenges.

Survey details and landlord profiles influencing rent decisions

The survey highlights that landlords with smaller portfolios, no property debt, or those who do not use letting agents are less likely to raise rents. Conversely, landlords with larger portfolios, higher incomes, ownership of Houses in Multiple Occupation (HMOs), or those employing letting agents are more inclined to increase rents, primarily to offset rising running and maintenance costs.

Almost half (48%) of landlords reported increasing rents at least once during the previous year, often citing the need to cover higher expenses related to property upkeep and the broader economic environment. This suggests that while many landlords are sensitive to tenant pressures, they also face significant cost challenges.

Regarding rent arrears, the survey found that 26% of landlords had tenants behind on payments, a slight decrease from 29% last year. Landlords typically engage directly with tenants to manage arrears, with 42% discussing repayment options and 39% providing information on tenant rights and support services. Additionally, 21% of landlords had agreed repayment plans, and 17% offered rent-free or reduced-rent periods to ease tenant financial burdens.

Context of rent-setting amid evolving legislation and economic pressures

The findings come in the context of the Renters’ Rights Act, which has introduced new protections for tenants and altered the dynamics of rent negotiations. The Act aims to balance tenant security with landlord interests, but its impact on rent-setting behaviour is complex.

Many landlords are navigating a challenging environment where tenant affordability is a significant concern, yet landlords themselves face increased costs from inflation, maintenance, and regulatory compliance. The decision to maintain rent levels reflects a strategic choice to avoid tenant turnover costs and potential void periods, which can be financially damaging.

Smaller landlords, often with limited borrowing and fewer properties, may be more risk-averse and motivated to maintain stable relationships with tenants. Larger landlords with more extensive portfolios might have greater financial flexibility but also face higher operational costs, prompting selective rent increases.

Practical implications for landlords and letting agents

For landlords, the trend towards rent stability suggests a need to carefully assess rent reviews in light of tenant circumstances and market conditions. Maintaining good tenant relations can reduce void periods and arrears, but landlords must also ensure rents cover essential costs to sustain their investments.

Letting agents play a critical role in advising landlords on rent-setting strategies, balancing market rates with tenant affordability. Agents may need to support landlords in communicating rent decisions sensitively and managing arrears proactively through tailored repayment plans or temporary concessions.

Landlords should also monitor ongoing regulatory changes and economic indicators that affect rental income and property expenses. This includes keeping abreast of any amendments to tenancy laws, safety regulations, and local licensing requirements that may impact operating costs.

Uncertainties and areas to watch for landlords

While the current data shows a significant portion of landlords holding rents steady, future economic shifts or policy changes could alter this balance. Inflationary pressures, energy costs, and property tax changes remain potential drivers of rent increases.

The full impact of the Renters’ Rights Act on landlord behaviour and tenant outcomes is still unfolding. Landlords should watch for further guidance and case law that may clarify obligations and rights under the new framework.

Additionally, the evolving landscape of tenant support services and arrears management could influence how landlords approach rent reviews and arrears arrangements going forward.

What landlords should consider now

• Review rent levels regularly in relation to market conditions and tenant affordability, balancing income needs with tenant retention.
• Maintain clear records of rent reviews, tenant communications, and any agreed repayment plans or concessions.
• Stay informed about legislative changes affecting tenancy agreements, rent increases, and arrears management.
• Consider engaging letting agents for professional advice on rent-setting and tenant relations, especially for larger portfolios.
• Monitor tenant arrears closely and adopt proactive, flexible approaches to support tenants while protecting rental income.

Supporting landlords through rent-setting challenges

The Landlord Association (TLA) membership offers practical compliance resources and guidance to help landlords manage rent reviews and tenant relations effectively. Through TLA’s developing property management platform, ORBIT, currently in BETA testing, landlords and letting agents can organise rental documentation, record communications, and track rent and arrears management actions in one place.

ORBIT aims to assist members in maintaining comprehensive records of rent decisions and tenant interactions, supporting evidence retention for compliance purposes. Access to TLA’s up-to-date compliance resources and policy updates helps landlords stay informed about regulatory developments impacting rent-setting and arrears strategies.

Exploring TLA membership and ORBIT BETA access can provide landlords with tools to navigate the complexities of rent management under current economic and legislative conditions.

Looking ahead, landlords will need to balance cost pressures with tenant affordability carefully, adapting rent strategies as market and regulatory environments evolve.

Sources: Landlord Today