The Chief Executive of the National Residential Landlords Association (NRLA), Ben Beadle, has warned that rising mortgage costs may force landlords out of the market as the Bank of England forecasts average monthly payments on buy-to-let mortgages to increase by around £275 by the end of 2025.
In response to this, Beadle said: “Growing mortgage costs are putting responsible landlords in an impossible position. They can either exit the market when the demand for rented housing already outstrips supply, increase rents, or absorb the rising costs, which many simply cannot afford.”
While homeowners have been offered some relief through the Government’s Mortgage Charter, Beadle stressed that the private rented sector has been left without support.
The NRLA is urging the government to step in to protect the market from the impact of growing costs. Beadle proposed that housing benefit rates be unfrozen without delay to ensure renters can cover their rent payments. He also called for the scrapping of recent tax hikes on the sector to boost the supply of rental homes.
The Bank of England’s latest Financial Stability Report noted that landlords are currently under pressure due to higher interest rates and structural changes, including adjustments to income and capital gains tax rules, proposed changes to building energy efficiency regulations, and tenancy protection.
Recent research from property firm Savills also highlighted the challenges faced by landlords, noting that investors’ net profits fell below 4% in Q1 2023. This marks the lowest profits since 2007, due to the impact of 12 successive increases to the Bank base rate, compounded by restricted tax relief.
