Editor's note: This brief was summarised by The Property AI Team from a report by Property Industry Eye. Read the original article for full details.
Landlords Respond to Rising Costs with Rent Increases and Stricter Tenant Selection
Almost two-thirds of professional landlords in the UK have increased rents in response to rising costs, according to Handelsbanken’s latest Property Investor Report. The report, based on a survey of 200 UK property investors, landlords, and property management professionals, found that 63% had raised rents due to higher borrowing, maintenance, insurance, and compliance costs affecting the private rented sector.
The research also revealed that 41% of respondents have changed the type of tenants they target, with a focus on what they consider to be lower-risk applicants. Additionally, 59% said the forthcoming Renters’ Rights Act had prompted them to tighten their tenant selection criteria, and 44% are considering bringing forward planned rent increases.
Cost Pressures and Investment Decisions
Maintenance and repairs were identified as the most frequently cited cost pressure by 45% of respondents, followed by insurance (41%) and energy efficiency improvements (40%). The report also indicates that higher costs are influencing investment decisions, with 20% of landlords having sold properties and 19% removing properties from the rental market altogether due to rising costs. Furthermore, 46% said they had delayed upgrades or improvement works, raising concerns about a potential slowdown in investment in existing rental housing.
Among those surveyed, the median estimated cost of complying with the Renters’ Rights Act was £5,000, while the average figure was £31,411, reflecting significant variation between portfolios. The median expected spend on compliance and property upgrades over the next 12 months was £20,000.
Outlook for the Private Rented Sector
Despite these pressures, the report does not indicate a wholesale retreat from the market among professional property investors. According to the survey, 84% plan to increase their portfolio holdings over the next 12 months, compared with 54% in the 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% cited buying opportunities or valuations, 58% pointed to strong rental demand, and 33% mentioned financing availability as reasons for their decision. The findings suggest that professional investors remain broadly confident in property as an asset class, even as they adapt to a more demanding regulatory and cost environment.
Source: Property Industry Eye