A new Bank of England forecast predicts that average monthly payments on buy to let mortgages will increase by around £275 by the end of 2025.

The Bank of England breaks the news in its latest Financial Stability Report. 

It notes: “Landlords are currently subject to a combination of factors that are putting pressure on their profitability: higher interest rates and structural changes – including adjustments to income and capital gains tax rules and proposed changes to building energy efficiency regulations and tenancy protection. 

“The interest coverage ratio (ICR), which is a measure of rental income relative to interest payments, shows the extent to which a landlord’s rental income covers their cost of borrowing. 

“A landlord with high debt-servicing costs relative to their rental income (ie a low ICR) is more likely to experience repayment difficulties. 

“As with owner occupier mortgages, higher interest rates mean an increase in mortgage servicing costs when fixed rate deals need to be refinanced, and most BtL mortgages are interest only, which increases the relative impact of higher rates. 

“The average increase in monthly repayments on BtL mortgages by the end of 2025 is projected to be around £275.”

Ben Beadle, chief executive of the National Residential Landlords Association, says in response: “Growing mortgage costs are putting responsible landlords in an impossible position. 

“Either they leave the market at a time when demand for rented housing is already outstripping supply, increase rents, or soak up growing costs which many simply cannot afford.

“Whilst help has been provided for homeowners in the form of the Government’s Mortgage Charter, nothing has been done to support the private rented sector.

“It is vital that ministers step in to protect the market from the impact of growing costs. For renters, housing benefit rates need to be unfrozen without delay to ensure they can cover their rent payments. 

“Alongside this, tax hikes on the sector need to be scrapped to boost the supply of homes to rent that tenants desperately need.”