A survey by Spareroom revealed that 41% of landlords are only just meeting mortgage payments, while 43% said rents will no longer cover their mortgages if interest rates increased by 2%.
A further 22% said a base rate rise of 1% would put them in the red, while 10% said a rise of just 0.5% would create a shortfall.
The concern over mortgage payments and potential rate rises has led 63% of landlords to increase rents in the past six months, with 21% hiking rents by 5% this year. However, over half of landlords worry that raising rents will lose them loyal and valuable tenants.
Matt Hutchinson, director of Spareroom, said: “The rise in Capital Gains Tax for higher rate taxpayers means that many landlords either won’t be able to sell their buy-to-let properties or will sell at a far lower price. At the same time, holding onto their properties means they are at the mercy of the Bank of England and facing higher mortgage payments.”
However, Andy Frankish, managing director of Mortgage Talk, said: “This is not a problem we have seen and most landlords could afford a significant rate rise before it affected them.”
