Landlords left to plug the gaps from rising bills

Landlords with larger properties are braced for a fresh wave of rental arrears as energy bills rise and local authorities do not plug gaps in housing benefit.

Buy-to-let investors who own shared houses let on a room-by-room basis face a tough choice as utility bills rocket: shoulder the costs or raise the rent and make properties potentially unaffordable for their tenants.

Owners of HMOs (houses in multiple occupation) typically include energy bills and council tax in the overall rent bill. They are preparing for big jumps in costs as the energy price cap rose yesterday and will again in October.

Kevin Sands*, 62, is a landlord whose portfolio includes nine HMOs in Colchester, Essex.

He expects his properties’ energy bills to double this year and is already increasing his tenants’ rent to offset rising costs.

“We will see bills go up massively. We are writing to our existing tenants and saying we need to put the rent up by 10pc to help mitigate the fact that we could be paying an extra £4,000 a year in energy bills on each property,” said Mr Sands.

“I am worried that my tenants will be struggling to cover it, especially as there are so many other rising costs. It is a perfect storm,” he added.

HMO tenants who are already in distress will be hit hardest.

The Government has frozen housing benefit despite record rent rises, and local authorities will not increase housing benefit payments to account for rising energy bills on HMOs.

Tom Irons*, 36, is a part-time NHS worker who lives in an HMO and is on housing benefit. In February his landlord increased his rent by 15pc to cover rising energy bills.

This means Mr Irons’ monthly housing costs have jumped by £50 to £390. This is still below his local housing allowance, but the local authority will not increase his housing benefit payments because the rise in costs is due to energy bills rather than rent.

Mr Irons said: “I live in an HMO out of necessity, not choice, and I have no influence over the other tenants’ use of gas and electricity.

“Meanwhile, the cost of my food shopping has increased by 20pc. I have to account for every penny, I budget everything. I am already on the edge. When is this going to end?”

Chris Norris of the National Residential Landlords Association, a trade body, said: “The impact of rising costs is compounded for those who rely on Universal Credit as the Government has elected to disregard spiking inflation and leave vulnerable households to struggle with living costs.”

He called on the Government to unfreeze housing benefits.

“So soon after the height of the Covid pandemic, we cannot afford another rent debt crisis fuelled by Government inaction,” he added.