A specialist buy to let mortgage broker says the government must help landlords with mortgage costs, as well as owner occupiers trying to cope with massively increased payments. 

Angus Stewart, chief executive of online brokerage Property Master, says: “The continued increase in interest rates is causing a perfect storm. George Osborne’s changes to the rules on interest rate relief in 2015 had minimal impact when interest rates were low.  However, they are now seriously impacting the profitability of a landlord’s business.  

“Coupled with much tougher affordability rules means that many landlords cannot remortgage at current rent levels leaving them on the lender’s SVR some of which are approaching 10 per cent. They are mortgage prisoners, and the logical option is to sell or substantially increase rent.” 

Recent research undertaken of Property Master customers identified 40 per cent of landlords having either recently sold or considering selling one or more properties.  

Stewart says: “If this came to fruition, the impact would be very significant on tenants and the overall housing market.  Recent press talk has been of helping homeowners with the increasing costs of mortgages but it’s important that the Government doesn’t ignore Landlords which are a key source of housing with five million households.” 

Stewart’s comments follow yesterday’s Bank of England decision to increase base rate from 4.5 to 5.0 per cent.

This marks a 13th consecutive hike since rates were first increased in December 2021 from a low of 0.1 per cent.  This is also the fifth consecutive interest rate increase seen so far in 2023, which has followed the same pattern as 2022 which saw eight consecutive base rate jumps. 

As a result, the current rate of 5.0 per cent is the highest seen in over 15 years since April 2008.

Responding to the move, Ben Beadle – chief executive of the National Residential Landlords Association – comments: “This decision will add further pressure on renters and landlords alike. Some 85 per cent of buy to let mortgages are interest only, making them especially hard hit by rising mortgage costs. 

“Some landlords have seen mortgage payments rise by almost 240 per cent since December 2021.

“Analysis for the NRLA has found that 735,000 rental properties could be lost across the UK if interest rates peaked at five per cent, further exacerbating the supply crisis renters are facing.

“It makes no sense to have a tax system that discourages investment in the homes renters need, and benefit payments that fail to provide vulnerable tenants with the assurance that they can afford their rents. The Chancellor needs to take urgent action to support the rental market by reintroducing mortgage interest relief in full and unfreezing housing benefit rates.”

Meanwhile lettings agency Leaders Romans Group has released findings from a survey of landlords of 380 privately rented properties who are registered with LRG brands.

It says only 68 per cent definitely plan to maintain their portfolio over the next year.