Private landlords concerned by potential rise in buy-to-let mortgages rates

A survey* by the National Landlords Association (NLA) has shown that the majority of private landlords will be affected by a rise in buy-to-let interest rates.

The research comes the same week as the decision by The Bank of England’s Monetary Policy Committee (MPC) to retain the base rate at 0.5% for the month of August.

The reappearance of several major finance providers, coupled with high demand for rental properties, has encouraged landlords to increase their buy-to-let property portfolios in recent months.

The survey showed that a buy-to-let interest rate rise of two per cent would have a negative impact on 89 per cent of landlords, with 53 per cent concluding that the effect would be significant. A further eight per cent could be forced to re-evaluate their future as a landlord, with six per cent having to reduce their portfolios or leave the private-rented sector completely.

An interest rate rise of just one per cent on this type of mortgage would have a negative impact on 80 per cent of landlords, with 29 per cent stating that such an increase would have a significant impact on their lettings business.

Almost three quarters of landlords surveyed (73 per cent) have at least one mortgage, of those, 47 per cent have at least five buy-to let mortgages held against their property portfolio.

Just under one half of landlords (49%) strongly agree that the market would further benefit from more buy-to-let lenders and greater competition.

David Salusbury, NLA Chairman, commented:

“These statistics show how important it is for a landlord expanding their portfolio to construct a sound long-term business plan when considering buy-to-let properties.

“The NLA believes that such properties can be a worthwhile investment and can help ease the current housing crisis by providing a source of much-needed housing, but landlords should ensure that they plan for the future and are mindful of any potential increases in buy-to-let interest rates.”