Landlords have seen their mortgage payments rise at a faster rate than rents in the past year, research from Octane Capital has revealed.
The research, which compared how rents have increased over the past year versus the average cost of buy-to-let mortgage payments, showed that mortgage payments have risen by 13 per cent year-on-year.
This outstripped the rental price growth of 9.9 per cent and signals that some investors are not passing on all their rising costs to tenants.
This, therefore, is closing the gap between mortgage and rental payments.
Octane Capital CEO, Jonathan Samuels, said: “While landlords are often blamed for ramping up rents, in many cases buy-to-let mortgage costs are rising faster than the cost of new tenancies.”
Regional disparity
The research also showed a regional disparity, with mortgages rising by more than double the rate of rents in Yorkshire and the Humber and the north east, signaling landlords are feeling the pinch the most in those regions.
In Yorkshire, mortgage payments increased by 15.2 per cent year-on-year to £712 while, over the same period, rents rose by 7.4 per cent to £826.
This therefore suggests that the gap is closing between the two.
Similarly, in the north east mortgage payments increased by 15.4 per cent to average of £547 per month.
This is compared to a rental price increase of 7.6 per cent, bringing it to £636 per month.
Samuels added that these markets “clearly don’t allow landlords to recover all their higher outgoings in the form of rents.
“This year has undoubtedly been a tough one for landlords and renters - as neither has been able to escape rising costs.”
However, one area that went against this trend was London where rents increased by 12.9 per cent year-on-year, thereby exceeding the 11.4 per cent increase in mortgage payments.
As a result, tenants in London have to pay £2,109 per month for a new tenancy which exceeds average monthly repayment costs of £1,789.
Additionally, in Scotland, the government’s policy of controlling rents on existing tenancies appears to be having the opposite effect for new tenancies.
This is because rents are 15.8 per cent more expensive annually at £973 per month, a bigger percentage increase than any other region in Great Britain.
This compares to mortgage costs of just £643 per month north of the border, after rising by 12.4 per cent year-on-year.
tom.dunstan@ft.com
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