Assetz indicated that buy-to-let (BTL) landlords would attempt to increase rents as a way to dampen the blow of recent Base Rate rises.
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With five Base Rate rises over the previous 12 months, Stuart Law, managing director at Assetz, felt that landlords would attempt to pass on any mortgage increases by increasing tenants’ rents – a move that could damage the wider market.
He explained: “The Bank of England may pain investors through higher interest rates but the Monetary Policy Committee should consider that this will result in higher rents for tenants, who will end up paying through the nose.”
Speaking at the launch of the Hometrack BTL automated valuation model, Richard Donnell, director of research at Hometrack, suggested that landlords could not continue to increase rents in line with Bank Base Rate rises.
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“There is still a gap between renting and buying a property, but it’s a small one. Landlords cannot keep increasing rent, as it could become cheaper to buy a property. If we experience a market downturn, we could see a number of people who previously rented, turning to buying as it becomes more affordable.”
