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The NRLA calls for mortgage relief as interest rates soar

The National Residential Landlords Association (NRLA) is demanding the government takes immediate action to alleviate the financial strain being placed upon renters and landlords.  The NRLA has called for additional mortgage relief as interest rates continue to soar following 13 consecutive interest rate hikes since December 2021.

They NRLA fears that if the Chancellor, Jeremy Hunt, doesn’t tackle rapidly rising interest rates or risk losing hundreds of thousands of homes from the private rented sector because of the increasing cost of buy-to-let mortgages.

Ben Beadle of the NRLA calls for mortgage relief

They believe restoring mortgage interest relief and unlocking housing benefit rates will ease the burden as Ben Beadle, the Association’s Chief Executive, explains:

“The decision will put further pressure on renters and landlords alike.  A total of 85% of buy-to-let mortgages are interest only, making them especially hard hit by rising mortgage costs. Some landlords have seen mortgage payments rise by almost 240 per cent since December 2021.  Analysis for the NRLA has found that 735,000 rental properties could be lost across the UK if interest rates peaked at 5%, further exacerbating the supply crisis renters are facing.”

He continued by outlining the immediate threat to tenants and suggesting what he feels would be a common sense solution:

“It makes no sense to have a tax system that discourages investment in the homes renters need, and benefit payments that fail to provide vulnerable tenants with the assurance that they can afford their rents.  The Chancellor needs to take urgent action to support the rental market by reintroducing mortgage interest relief in full and unfreezing housing benefit rates.”

The NRLA’s appeal has been given even greater urgency given the Bank of England has just raised interest rates by 0.5% to 5% to combat the UK’s high inflation.

Without mortgage relief will thousands of landlords be forced to quit the private rental sector?

Online mortgage broker Property Master has said their research has highlighted thousands of landlords may be forced to quit the private rental sector because of rising mortgage rates.  According to their research 40% of landlords have either recently sold, or are considering selling, one or more properties.

At present most landlords borrow on interest-only mortgages.  As their fixed rate deals start to expire, they face a potentially critical increase in the cost of relaying these arrangements as most fixed rates are now over 6%.  With this in mind, it’s no surprise the impact on the profitability of their properties is causing landlords to rethink their position.

If this trend continues Property Master say the impact would be “very significant” on both tenants and the overall housing market given landlords provide an estimated five million homes across the UK.

Our property team is ready to help landlords make buying or selling properties as easy as possible.  If you would like to discuss your next transaction, please email me at Jeremy.Tulloch@collinshoy.com or call me on 0208 515 6600.