Mounting predictions of further interest rate rises have prompted over half of landlords to say that they'll raise rents to absorb the extra costs - resulting in rising numbers of renters growing increasingly concerned about their financial future.
According to a recent survey of over 1,000 UK renters by specialist property finance broker, Finbri, 62.54% of renters express concern or strong concern about how rising interest rates could affect their monthly rental payments. Additionally, 19.38% of renters have already experienced unaffordable rent increases, alongside several other issues while renting a property.
How much have rents recently increased?
Renters are being hit hard as monthly rental prices are growing at the fastest annual rate for more than a decade. According to the Office for National Statistics, private rental prices paid by UK tenants rose 4.2% in 2022.
Outside of London, asking rents have increased by more than 3% over the past three months, according to Rightmove. The average monthly rent outside of London is £1,162, while it's £2,343 in London, where rents have increased by 16% in the past year.
How can renters prepare for a potential rate rise?
Monthly rental costs have become a deep concern for tenants. 73.93% of UK renters are Strongly concerned (36.86%) or Concerned (37.06%) about rent increases. To help alleviate some of these concerns, or prepare for the prospect of rent increases, we have compiled a list of tips for renters to consider when planning their future finances and budgeting.
Contacting landlord: If renters are concerned about the potential impact of rising interest rates, it could be beneficial to have an open and honest conversation with their landlord - explain the situation and inquire about their intentions ahead of potential rate increases.
Research options: As costs rise, it's important for renters to be aware of their alternative options. There may be other rental properties available that are more affordable, or it may even make more sense to move to a different area if your current location is becoming too expensive. Research the rental market to see what other properties are available and how they compare with your current rental costs.
Start budgeting now: Renters should review their outgoings and develop a budget today to help prepare for the potential rent increases. This can include cutting back on non-essential expenses, setting up an emergency fund, and seeking ways to increase income.
What to do if your rent is increased and now unaffordable?
If you're facing unaffordable rent increases due to rising interest rates, taking the necessary steps to protect yourself is essential.
The landlord must supply a section 13 notice if they want to increase the rent. Only tenants with assured shorthold or assured tenancies can receive section 13 notices. If you have any other kind of tenancy, you shouldn't accept a section 13 notice.
A section 13 notice shouldn't be sent to you if your leasing agreement already stipulates that your rent will go up; for instance, if it has a "rent review provision" or if your tenancy is fixed-term.
Further information can be found at Citizens Advice. If you receive a section 13 notice and think the rent increase is unaffordable, you can dispute it. You can do this by writing to your landlord or agent and stating why the rent increase is unreasonable.
You may also be able to challenge the rent increase if you think it's unfair by going to a tribunal - for example, if the increase is higher than similar rented properties in the area. Finally, if the rent increase is deemed unaffordable, you may be eligible for housing benefits or Universal Credit to help cover the extra cost.
If you decide to leave the property, you should check your tenancy agreement to ensure you fulfil all contractual obligations. You may also be entitled to compensation for any losses incurred due to the rent increase.
Final thoughts
Rising interest rates are a cause for concern for many renters, as they can lead to unaffordable rent increases. Renters must research their options and proactively prepare for these changes. Speak to your landlord, review your financial situation, and look for other rental options. Ultimately, you must be aware of your rights and the support available if you face unaffordable rent increases.
The private rental market is vital as it provides accommodation for those unable to get on the property ladder and landlords with an income. But with increasing rates, landlords are under significant pressure, with many looking to leave the market altogether. Renters are experiencing anxiety and fears over rent increases. During these uncertain times for the UK rental market, landlords and tenants must work together to navigate the current climate.
Stephen Clark, from Finbri, comments: "The growing concern about interest rates and the prospect of increased monthly rent is not unwarranted.
"Many renters have already been struggling to make ends meet even with the current interest rates, so understandably, they are worried about how an increase in interest could affect them. But landlords are also in a tough position. If their monthly mortgage payments on their BTL property increase as a result of rising rates, this additional cost needs to be covered.
"The private rental market is vital in the broader UK housing market and the relationship between landlords and renters is more symbiotic than ever before."