David Fell, lead analyst at Hamptons, said: “The last time mortgage rates spiked in late 2022, landlords’ higher costs were quickly passed on to tenants through rapidly rising rents.
“During both 2022 and 2023, rental growth outpaced wider inflation, rising by 17 per cent.
“Ten years of typical growth was squeezed into the space of just 18 months.
“Tenants looking for somewhere new to live were forced into above-asking-price bidding wars to secure a home, while renters renewing existing contracts, who may have been paying the same rents for years, also saw their rents rise.
“But as mortgage rates dropped back in 2025, rental growth slowed. Rents ended 2025 below where they started.
“Across London, rents saw material falls.
“If interest rates remain materially elevated, there is a risk that we will see a second round of elevated rental growth.
“This is being driven by remortgaging landlords recording rises in monthly mortgage payments of 10-20 per cent so far this month, costs which may eventually end up coming out of tenants’ pockets.
“The share of homes bought by investors dropped by a third between February and March, reflecting some degree of uncertainty among investors.”
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