Buy to let rents are going up so that landlords can cover letting agent costs when a tenant fee ban starts, claims a property expert.
Tenants have seen rents rise at the fastest rate for three years – at an average 3.3% to an average £942 a month in the year to the end of March.
The figures are distorted by London rents, which increased by 2.8% in the year to an average £1,613 a month.
Rents for the rest of the UK, excluding those in the capital, are an average £782 a month, according to tenant referencing firm Homelet, which monitors and reports on rent changes each month.
“The acceleration we’re seeing in agreed rental values comes as no surprise,” said chief executive Martin Totty.
“While the aim of the Tenant Fees Act is to reduce the costs that tenants can face, landlords still need to cover the costs that are incurred when setting up a tenancy. With landlords already feeling the impact of taxation changes, the expectation is that costs will be passed back to tenants through higher rents, particularly for new tenancies.
“Landlords’ ability to increase rents will largely be determined by local market dynamics of supply and demand for property.”
A new law in England stops landlords and letting agents from charging upfront fees when a tenancy starts or renews. Scotland already has a similar ban and one is expected to in Wales from the autumn.
“Landlords may recover the additional cost burden they face by edging up rents,” said Totty.
“This will require current high levels of employment and real wage growth being sustained. Tenants and landlords could get what they want – tenants are relieved of the one-time up-front burden of fees and landlords meet these costs and recover them over time via gradual increases to monthly rents.”