Majority of Tenants Can Not Afford An Average Rent Rise

Majority of Tenants Can Not Afford An Average Rent Rise

Platinum Property Partners has released data that shows the majority of tenants could not afford an average rent rise that could be needed in order for landlords to stay profitable. Due to the changes that have come to the way mortgage interest payments are taxed. As of 6th April 2017, landlords have to pay a tax on part of their mortgage costs. The tax will affect higher rate taxpayers and nearly 500,000 landlords who will see themselves pushed in to this higher tax band because the changes will lead to an inflation of their rental income. In order to deal with this increase in tax, it is thought that around two thirds of landlords will look to increased rent in order to cope.

It is thought that landlords will need to increase rent by 20% in order to remain profitable as these changes come in. At the moment, the average UK rent is £895, which means that the rent increase could be up to £179 a month across the rental market. It is thought that tenant could avoid this increase by choosing HMOs, or houses with multiple occupancy. These shared houses will also share the cost of any rent increase. This means that the tax changes could lead to a potential increase of £19 for tenants in HMOs, which is a far more affordable cost.

79% of tenants have said that they could not afford a rent increase of nearly £180, saying they would have to look for cheaper accommodation. It is also thought that HMO landlords may not have to increase their rents due to these changes because their properties already generate up to four times the income of a single occupancy property. HMO tenant already benefit from lower rents by sharing with other tenants, making any rent increases more affordable. It is thought that the rent increases in HMO could be up to £112 per property, which when divided by six tenants would only be £19. From the data presented, 76% of tenants have suggested that they would be able to afford a rent increase of £25.


Leave a Reply

Latest Issue

Related Articles

More stories from Business, Legal & Financial