Buy-to-let landlords fear interest rate rise
Interest rates on mortgages for buy-to-let properties may increase in the coming months, landlords operating in the sector fear.
A new survey from the National Landlords Association (NLA) revealed that the majority of owners would be affected by a rise in the interest rate.
The Bank of England voted last week to keep its benchmark interest rate at 0.5 per cent, a historically low level that has been maintained since March 2009.
However, there has been speculation that the authority will increase interest rates in a bid to curb rising inflation.
Figures from the NLA show that a two per cent rise in interest rates would have a negative impact on as many as 89 per cent of buy-to-let landlords.
More than half (53 per cent) of these people believe that the effect of an increase would be "significant".
Eight per cent of landlords believe they would have to re-evaluate their future and six per cent said they would have to reduce their portfolio or exit the market completely.
But even if the Bank of England raised interest rates by a lower percentage, landlords would still be affected.
A one per cent rise in the base rate would have a negative effect on eight out of ten landlords, with almost one-third claiming their lettings business would be severely impacted.
David Salusbury, chairman of the NLA, said: "These statistics show how important it is for a landlord expanding their portfolio to construct a sound long-term business plan when considering buy-to-let properties."
The organisation's data also suggested that almost three out of four landlords have a mortgage and 47 per cent have five or more buy-to-let loans.
Mr Salusbury said: "The NLA believes that such properties can be a worthwhile investment and can help ease the current housing crisis by providing a source of much-needed housing, but landlords should ensure that they plan for the future and are mindful of any potential increases in buy-to-let interest rates."
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