Interest rates have returned to the headlines this month - with base rates currenty standing at 2.25 per cent - the highest rate for 14 years - with the Bank of England warning they could rise again.
Many NRLA members – around 60 to 65 per cent - have at least one buy-to-let mortgage. Most of these are fixed term deals, but with 30 per cent of members renegotiating at least some of these each year, many landlords are facing a sudden hike in their repayments.
Our most recent consultation asked members about base rates and the level at which their landlord income simply becomes insufficient to meet their outgoings and repayments.
The results are shown in the chart. Once base rates hit five per cent then the impact on the PRS could be profound – 50 per cent of landlords in our survey who have buy-to-let mortgages become unprofitable.
Even though not all landlords have a mortgage, most do – and up to 30% of all NRLA landlords (those with and without buy-to-let mortgages) become unprofitable if the base rates hit five per cent.
This will only add to housing market turmoil at a time when private rented accommodation is needed and could have a major impact on supply if landlords decide to sell up.
More information
The NRLA has today written to Kwasi Kwarteng, calling on the Chancellor to adopt a cost-of-living plan for the private rented sector as tenants and landlords face ever growing costs. You can read more here.
NRLA mortgage partner 3MC has also produced a blog on lenders' recent decisions to withdraw certain mortgage deals. You can read more here.