The Bank of England’s decision to increase interest rates yesterday could lead to rents rising across the country as some landlords pass on the extra costs to their tenants.

Thousands of buy-to-let landlords are facing a hike in monthly mortgage payments after the Bank’s Monetary Policy Committee raised the rates from 0.25% to 0.5% – the first increase in more than a decade.

While the rate rise will provide some savers with a modest rise in their returns, households with a variable rate mortgage now face higher mortgage interest payments, with several lenders already confirming that they will pass the rate rise in full to its variable rate home loan customers, and this could lead to higher rents.

“The first rate rise in a decade could fire the starting gun for an increase in residential rents,” said John Goodall CEO and co-founder of Landbay.

Landbay released its latest rental index earlier this week revealing that in the 15 months since the MPC voted to cut the base interest rate from 0.5% to 0.25%, residential property rents have grown by just 0.94% across the UK, led by gains in the East Midlands (3.13%), East of England (2.76%), West Midlands (2.53%) and South West (2.43%).

Meanwhile, house prices have risen by 5% since the rate cut in August 2016; more than five times the pace of rental growth.

Goodall continued: “Landlords have had to face a catalogue of challenges over the past couple of years, from stricter regulation, reductions to tax relief, and a significant stamp duty tax hike when buying a buy-to-let property.

“Many expected these [expenses] would be passed on to tenants, but low mortgage rates have enabled landlords to absorb much of these costs, especially those that are wary of tenants facing negative net wage growth, so a base rate rise could make all the difference.”