Simon Duce Blog

How dare you raise the rent!

We're all watching inflation. We're all watching unemployment levels. We're all watching house prices. Sure enough, every property professional will be monitoring the factors that influence the Bank of England and its interest rate intentions.

Most people are resigned to the fact that interest rates won't stay at their current historical low. The good times for borrowers will come to an end but we're expecting it. And we know that when interest rates go up, lenders will quickly raise mortgages rates. Those on tracker and variable mortgages will pay more each month, and standard variable rates on new products will also adjust. That's life, right No demonstrations, no calls from a charity to stop the hike, no forums of people witch hunting the Bank of England (despite maybe some personal cursing under your breath!).

But wait. A landlord dares to raise the rent on his property. All hell breaks loose. Tenants are on the point of poverty, the press decrees 'generation rent' are even further away from homeownership due to their inability to save for a deposit, Shelter might just claim that greedy landlords are fleecing hapless people and sauntering off on tropical holidays on the profit (just speculation, you must note).

Rent rises and interest rates are inexplicably linked. Most landlords will be investing in property with some sort of mortgage - even multiple mortgages - and a fair portion of those will be interest only (remember those days). Landlords will be wincing just as much as homeowners when interest rates do rise, and it is only natural that part of the rise is passed on to the tenant. It doesn't make business sense for the landlord to absorb the hikes, especially when other areas of running rental properties are also rising.

Figures released by the Halifax in association with the Office for National Statistics, revealed the cost of running a home is above the rate of inflation. In fact, home maintenance and repairs is the third biggest annual expenditure, after rent/mortgage payments and fuel/utility bills. When you consider a landlord is responsible for most of a let property's upkeep, you can see how some landlords might be sailing close to wind - steering too close to the 'loss' side and barely breaking even.

So now might be the time to prepare the script in readiness for when tenants are faced with higher rents. Highlighting the facts, staying away from sensationalisation and having favourable comparisons to homeownership will all help when the time comes.

* Simon Duce is managing director of the ARPM Group, who provides national outsourced lettings and property management services