With some experts forecasting inflation to rise above 8% and stay there for most of 2022, more than 4 in 5 landlords (83%) are ‘concerned or very concerned’ that rising inflation will negatively impact their ability to continue to invest profitably in UK rental property. The survey found that concern about the impact of rising inflation on landlords' portfolio investments is prompting measures to mitigate rising costs, but it won’t drive a wholesale change in investment behaviour.
9 in 10 landlords (90%) say they expect rising inflation to have an impact on the cost of maintaining their property investments. More than half (52%) of respondents expect the cost of managing their property investments to increase by 25% to 50%. 1 in 10 (10%) of them expect costs to increase by more than 50%. Mortgage finance (52%), energy bills (52%) and insurance premiums (44%) are cited as the three aspects of property investment most likely to be impacted by inflation. Property management services are a close fourth (40%).
Despite these challenges, less than 3 in 10 landlords (29%) intend to reduce their property investment activity while inflation is high. Among the 71% who won’t downsize, 33% will continue as they are and make no changes, and a further quarter (24%) plan to increase their property investment activity.
When asked how they feel about property investment in the context of other so-called ‘inflation-beating’ assets, landlords remain confident. Gold and commodities are the most popular alternative ‘inflation-beating’ assets among landlords with 26% and 22% of landlords investing in them respectively, but 2 in 5 (38%) UK landlords believe their property investments outperform all other assets in this category.
The survey also revealed that 69% of landlords feel a responsibility to help their tenants mitigate the impact of the cost of living crisis on their lives. The most important actions landlords believe they can take to help tenants protect themselves against rising costs are temporarily freezing rents (37% of landlords support this), making energy efficiency upgrades (35%) and agreeing longer tenancy durations (34%).