Rents are rising at a slower pace than general inflation, the new HomeLet Rental Index reveals, leaving landlords who are facing higher costs with a dilemma.

Rents on new tenancies in February were, on average, 0.8 per cent higher than 12 months ago, while inflation is now 1.8 per cent. Five regions of the country registered rental price inflation that matched or exceeded general inflation last month. Four regions saw rents fall or remain static over the 12 months to the end of February.

The slowdown in rental price inflation highlights the balancing act that landlords face. New research just published by HomeLet into the attitudes of landlords suggests 51.5 per cent plan to raise rents this year or next; however, the remaining 48.5 per cent have no plans to raise rents.

The HomeLet survey, which captured the views of 3,700 landlords, found rising tax costs were a significant factor as, from April, the Government will phase in cuts to mortgage interest tax relief, leaving those with buy-to-let mortgages worse off.

However, the slowdown in rental price inflation and the significant numbers of landlords not planning to raise rents this year or next – underlines landlords’ and letting agents’ determination to focus on affordability and achievable rents in the current market. Many landlords are acutely aware that rising rents have already stretched affordability for some tenants, and are anxious not to exacerbate that. HomeLet’s research also underlines the positive relationship most landlords enjoy with their tenants, a significant factor in their desire to keep rents affordable. 96 per cent of landlords said they were happy with their current tenants.

31 per cent of landlords said their biggest concern was now the prospect of further changes in legislation and regulation in the PRS, as the sector waits to hear how a Government ban upfront letting agents’ fees will be implemented, landlords are keen to avoid additional upheaval.