In the wake of the Bank of England’s decision to raise interest rates to 5.25%, the National Residential Landlords Association (NRLA) has warned of serious implications for both renters and landlords, urging immediate Government action to avert a crisis in the rental market.
Ben Beadle, chief executive of the NRLA, expressed concern that “Today’s rate rise will pile yet more pressure on to renters and landlords.”
The Bank of England has cautioned that monthly repayments on buy-to-let mortgages will rise by an average of £275 by the end of 2025. This comes at a time when some landlords have seen mortgage payments surge by nearly 240% since December 2021.
Landlord profits have reached their lowest levels in 16 years, and while many landlords are striving to shield tenants from escalating mortgage rates, the outlook is grim without Government intervention.
Beadle explained the gravity of the situation: “Without Government action, renters face a bleak future as growing costs lead to a loss of more rental homes from the market.”
A recent analysis for the NRLA revealed that if interest rates were to peak at 5%, as many as 735,000 rental properties could be lost across the UK. With an average of 20 requests to view each available rental home, the recent rate hike is expected to exacerbate an already strained situation.
Beadle called for urgent measures, stating: “The Government must urgently scrap tax changes which have dampened the supply of much-needed private rented accommodation. Likewise, it is also crucial that housing benefit rates are unfrozen so that vulnerable tenants receive assistance during this challenging period for the market.”
The increase in interest rates has drawn attention to the precarious balance in the UK’s rental market. Landlords and tenants alike are faced with a growing financial burden, and experts are clear that without targeted policy actions, the consequences could be dire for those relying on rental accommodation.
