Industry News Sam Hunter 12/07/2023

Bank of England forecasts major rise in landlord mortgage costs

Today the Bank of England publishes its latest Financial Stability Report, in which it is confirmed that average monthly repayments for buy-to-let mortgage holders will go up by approximately £275 by the end of 2025.

The Bank's data also underlines the challenges which many private landlords now face, citing as it does the unfavourable market conditions which many UK landlords currently experience across the private rented sector.

The report's authors point out that “a combination of factors...are putting pressure on their [landlords'] 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.”

Responding to the report's key findings, Ben Beadle, Chief Executive of the National Residential Landlords Association, said:

“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.”

If you'd like to get further details on the Bank's research findings, click here to access the full report.