Landlords call for mortgage interest relief to be reintroduced

On the back of the interest rate hike, landlords are calling for the reintroduction of mortgage interest relief in full and for housing benefit rates to be unlocked.

Landlords are calling for the reintroduction of mortgage interest relief in full and for housing benefit rates to be unlocked to ease the burden of 13 consecutive interest rate rises.

Yesterday the Bank of England raised interest rates by a 0.5% to 5% as it battles to keep the UK’s persistently high inflation under control.

Inflation is currently running at 8.7%, down from recent months but far above the Bank’s 2% target.


But Ben Beadle, Chief Executive of the National Residential Landlords Association, slammed the decision and warned landlords could leave the sector entirely.

He says: “85% of buy-to-let mortgages are interest only, which means they are particularly exposed to the impact of rising mortgage costs.

Ben Beadle, NRLA

“Consecutive base rate hikes have seen landlords’ mortgage payments rise exponentially, with some increasing by almost 240% since December 2021 threatening the viability of their businesses.

“Analysis for the NRLA finds that 735,000 rental properties could be lost across the UK if interest rates peaked at 5%. This will exacerbate the ongoing supply and demand crisis across the private rented sector.”

And he adds: “It makes no sense to have a tax system that discourages investment in the homes renters need, or benefit payments that fail to reassure vulnerable tenants that they will be able to afford their rents.

“The Chancellor must take urgent action to support the rental market by reintroducing mortgage interest relief in full and by unfreezing housing benefit rates.”

This could result in some landlords deciding to offload their assets.”

Matt Thompson, Chestertons
Matt Thompson, Chestertons

Matt Thompson, Head of Sales at Chestertons, says yesterday’s rate rise will have an impact on overleveraged buy-to-let investors.

He adds: “This could result in some landlords deciding to offload their assets.

“At this stage, we haven’t yet encountered homeowners who have been forced to sell up but, if rates continue to rise, some owners may be forced to review the situation and weigh up their options.”


And Gary Scott, Partner at law firm Spector Constant & Williams, believes that the latest interest rate rise will be a nail in the coffin for many smaller landlords.

He says: “Alongside inflation and the demise of mortgage interest as a tax deductible expense makes being a landlord a burden rather than an attractive investment.

Gary Scott, Spector Constant & Williams
Gary Scott, Spector Constant & Williams

“To make matters worse, plans under the Renters Reform Bill to remove no-fault evictions means many landlords will face rent arrears and a long and painful process to evict tenants due to a courts system which is not fit for purpose and is creating delays of over a year to deal with possessions.

“It is not difficult to foresee that the effect of even a minority of those leaving the market is likely to result in a significant lack of supply driving up rents.”

Our landlords believe that the sector remains a good investment.”

Allison Thompson image
Allison Thompson, Leaders Romans

But Allison Thompson, National Lettings Managing Director of Leaders Romans Group, says: “Contrary to some of the headlines, we are seeing increased demand and ongoing confidence from our landlord clients, who believe that the sector remains a good investment.”

And Marylen Edwards, head of buy-to-let lending at property lender MT Finance, adds: “While economists had predicted stability by now, global factors – including the protracted negotiations over America’s debt ceiling – are still impacting inflation, while the cost-of-living crisis shows no signs of abating.”

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