Almost two-thirds of professional landlords and property investors have raised rents in response to increasing costs according to Handelsbanken.
Its fifth annual Property Investor Report found that 63% of respondents had increased rents, while 41% had changed the type of tenant they were targeting, including prioritising applicants considered lower risk.
Following the introduction of the Renters’ Rights Act, 59% said they were tightening tenant selection criteria and 44% were considering increasing rents earlier than planned.
The findings are based on a survey of 200 UK landlords, real estate investors and property management professionals and primarily reflect the experiences of investors operating sizeable portfolios.
OPERATING COSTS
Maintenance and repair bills were the most commonly cited cost increase, reported by 45% of respondents.
Insurance costs had risen for 41%, while 40% reported spending more on energy-efficiency improvements.
Handelsbanken calculated a median cost of £5,000 for complying with the Renters’ Rights Act, although the mean was substantially higher at £31,411, indicating considerable variation between respondents.
The median expected compliance and property improvement expenditure over the coming year was £20,000 at portfolio level.
Rising costs have also affected investment and maintenance decisions. One in five respondents had sold properties, while 19% had removed homes from the rental market.
Some 46% had delayed upgrades or improvement work, potentially creating longer-term challenges for the quality and energy efficiency of rental stock.
SELECTIVE ENVIRONMENT
James Sproule (main picture, inset), UK Chief Economist at Handelsbanken, says: “The private rented sector is not simply becoming more expensive for landlords to operate; it is becoming more selective.
“Higher costs and greater tenant rights are feeding into rent decisions, but they are also changing how professional investors think about tenant risk, affordability and long-term portfolio planning.
“For renters, that means the challenge may not only be what they pay each month, but how competitive the market feels when trying to secure a suitable home.”
EXPANSION PLANS
Despite the cost pressures, the research did not indicate a widespread retreat among professional investors.
Some 84% expected to increase their portfolio holdings during the next 12 months, up from 54% in Handelsbanken’s 2025 survey.
Among those planning to expand, 70% cited purchasing opportunities or valuations, 58% pointed to strong rental demand and 33% identified the availability of finance.
Sproule adds: “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, stricter tenant criteria and greater competition for good-quality homes.”
