Buy-to-let landlords need to ‘freeze rents, not tenants’

Buy-to-let landlords need to ‘freeze rents, not tenants’

Renters’ Rights London have called on landlords to freeze rents in response to rising energy prices.

Speaking to FTAdviser, the campaign group’s project-coordinator, Portia Msimang said buy-to-let landlords need to “acknowledge their good fortune” and do all they can to improve energy efficiency in the properties they rent out. 

Msimang said landlords need to “insulate the tenants by freezing rents, not renters, for the next couple of years”.

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Her comments came after it was reported last week that energy bills for the typical UK household are set to reach £4,266 annually next year, a jump of more than 250 per cent since the beginning of this year. 

Msimang said: “Buy-to-let landlords don't support tenants; tenants support buy-to-let landlords. In London, people living in the private rented sector already pay a disproportionately high percentage of income for somewhere to live. 

“The same is true in more and more places around the country.  Add increased energy costs and our access to other basic needs will be seriously compromised.”

At the same time however, landlords are facing rising mortgage interest rates, which some in the industry say will put pressure on them to increase rents. 

Earlier this month (August 4), the central bank raised the base rate of interest by 0.5 percentage points to 1.75 per cent and predicted that a recession is on the horizon.

The National Residential Landlord Association said that many landlords will be immediately affected by the interest rate rise. 

NRLA policy and campaigns director, Chris Norris explained this is because most landlords fix their buy-to-let mortgages for two or five years, and only around one third of NRLA members have fixed or variable rate products.

“This is unlikely to be the last interest rate rise this year, and there is a strong possibility most landlords will eventually have to face higher credit costs. Since George Osborne’s financial attack on landlords in 2015, they no longer have the ability to off-set interest costs from their taxable income,” Norris said.

He added: “Inevitably, higher interest rates will eventually eat into margins and increase pressure on landlords to either increase rents or look elsewhere for a viable investment."

Norris said the new prime minister will need to “reboot” the government’s approach to the private rented sector and called on him or her to introduce “pro-growth policies which will encourage investment, help keep rents down and address the UK’s supply and demand crisis”.

“It is only by doing this that the incoming premier will reduce the impact of the cost-of-living crisis on the private rental market.”

Lack of housing

Others in the buy-to-let industry pointed to the low supply of housing stock and said this has a greater impact on rising rents than interest rates will.