Rents to jump even higher as landlords face mortgage hikes

Well over half of private landlords may be forced to raise rents next year as they see their mortgage costs jump.

Research for the National Residential Landlords Association (NRLA) found that 60% of landlords expect their mortgage repayments to go up despite a quarter saying they plan to renegotiate their loans.

The news follows confirmation from the Bank of England last week that the base interest rate will stay at the 15-year high of 5.25%.

Exposed

According to data from Hamptons, landlord investors across the UK are now paying £15 billion in mortgage interest on an annual basis, up 40% over the course of the last year.

The buy-to-let market is especially exposed to the impact of higher interest rates, with 82% of mortgages in the sector interest-only, according to the Bank of England. This is compared to just 11% for owner-occupier mortgages.

The NRLA calls on the Government to support the sector by scrapping tax hikes, which have cut the supply of homes to rent and led to rising rents.

Landlords are simply unable to afford growing mortgage costs”.

Ben Beadle, CEO at NRLA, says: “Higher interest rates put continued pressure on renters, as landlords are simply unable to afford growing mortgage costs.

“Ministers need to accept that tax hikes on the sector have also played a major role in the affordability challenges we now see across the rental market,” he says.

“It’s time to reverse course and develop pro-growth tax measures. Without them it is renters who will continue to struggle as demand outstrips supply and rents go up.”

Research by Capital Economics for the NRLA found that removing the 3% stamp duty levy on the purchase of additional homes would see almost 900,000 new private rented homes across the UK over the next 10 years.