Landlords say they’re having to raise rents to cope with higher operating costs and, as a result, they want lower risk tenants.

Handelsbanken’s annual Property Investor Report says that 41% of property investors say costs have prompted them to switch their tenant profile, for example by prioritising “lower risk” tenants. 

Separately, in response to the Renters Rights Act, 59% say they are tightening tenant selection criteria, while 44% are considering raising rents earlier than planned.

The bank summarises the situation this way: “As landlords face higher operating, compliance, and upgrade costs, some are not only increasing rents but also becoming more selective about tenant risk, arrears exposure, and long-term tenancy stability.”

The costs most commonly reported as having increased over the past 12 months are maintenance or repairs, cited by 45%, insurance, cited by 41%, and energy efficiency upgrades, cited by 40%. 

These are core operating costs linked to keeping rental properties safe, compliant, insurable and fit for long-term occupation.

The report also finds evidence that rising costs are affecting wider portfolio decisions. 

One in five, (20%), of professional property investors say they’ve sold properties due to higher costs, while 19% say they have taken properties off the rental market. 

Meanwhile, 46% say higher costs have caused them to delay upgrades or improvement works, suggesting already tired housing stock may degrade further.

Despite these pressures, the report does not point to a wholesale retreat from the market among professional property investors.

Some 84% plan to increase their portfolio holdings over the next 12 months, compared with 54% in the bank’s 2025 survey. 

Almost all respondents, (93%), expect their portfolio value to rise over the same period, with 38% expecting it to increase “a lot”.

Among those planning to increase their portfolios, 70% say their decision is being driven by buying opportunities or valuations, while 58% point to strong rental demand, and 33% cite financing availability.

A bank spokesperson says: “The picture is not one of professional investors leaving the market wholesale. In fact, many remain confident that there is value to be had and are looking to grow.

“But a confident market is not necessarily an easier market for tenants. Higher costs are making landlords more selective, and that could shape the experience renters have in the year ahead through higher rents, more selective tenant criteria and greater competition for good-quality homes.

“The long-term aim should be a rental sector that offers better standards, clearer rights and more resilient properties. The challenge is making sure the transition does not put further pressure on tenants who are already navigating a more selective tenant criteria”.

Here is the 2026 Handelsbanken Property Investor Report.