Rental properties more expensive as landlords hike rent

18 May 2007
Buy-to-let landlords have been minimising the financial impact of rising interest rates by charging tenants higher rental fees, Paragon Mortgages has revealed.

Paying the mortgage on buy-to-let properties has become more expensive for landlords in the aftermath of four consecutive rate rises.

But many are passing on the strain by hiking average rents on a buy-to-let property by 6.5 per cent in the last quarter.

In January, the average rental property cost the resident £9,942, but that figure rose to £10,591 in April.

Almost a third of landlords told Paragon they were reacting to the rising cost of borrowing in the aftermath of interest rate rises by increasing rents.

"With demand for rented accommodation as strong as ever, landlords are able to increase rents on existing tenancies when they are renewed and apply a higher rent to new tenants," commented Nigel Terrington, Paragon's chief executive.

But 43 per cent of landlords said they were taking no specific action related to the rate rises, which could mean more affordable rental property is still available for those struggling to get onto the housing ladder.

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