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Rents likely to rise as Bank of England increases interest rate to 0.75%

Many buy-to-let landlords have so far refrained from passing on extra costs to tenants despite feeling the squeeze from a stamp duty increase on property acquisitions and more importantly for many the capping of mortgage interest relief at 20% on tax on rental income, but many private tenants may now find that extra mortgage costs as a result of yesterday’s interest rate hike may now be passed on in higher rents. 

Landlords who are on a tracker mortgage that matches any rise in the base rate will find that an extra 0.25% adds £12 a month to a £100,000 repayment mortgage and £25 on a £200,000 loan.

Alexandra Morris, managing director at MakeUrMove, commented: “Despite there being plenty of good landlords out there who want to keep the impact on their tenants to a minimum, the reality of the situation is that now the Bank of England has raised the base rate, many landlords will find that the increase in their mortgage repayments makes their current financial situation unaffordable, and will be forced to consider rent increases as a result.”

Some 40% of landlords surveyed by MakeUrMove earlier this year indicated that the new laws, regulations and tax changes being introduced meant they were already considering increasing rents and 29% said a rise in the base rate was their biggest worry in 2018.

Morris added: “Clearly, this rate rise is now an added pressure which could be the tipping point that means a large number of landlords decide they have to pass on their additional costs to tenants in order for it to remain viable for them to let their properties.

“The government are currently sleepwalking into an ever deepening housing crisis and the Bank of England base rate rises are adding to the burden felt by many landlords.

“This is particularly concerning when private landlords provide a vital role as the backbone of the UK housing market.”

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  • Mark Wilson

    My question is whether tenants have the ability to pay more. I suspect they don't and in the main Landlords will have to absorb the increased costs.

     G romit

    It's not a homogenous market. Tenants will be forced to move to cheaper properties and/or cheaper areas.
    If Heinz baked beans become too expensive people buy the own label brand, and if you can't afford the own label brand to buy the 'value' brand. If you can no longer afford the value brand then you go to your Local Council who give you on, a temporary basis only, Fortnum & Mason s finest baked baked beans at the expense of council taxpayers.
    Draw your own analogy.

  •  G romit

    Incessant Government meddling extorting more and more tax from Landlords is making the housing crisis worse, but myopic politicians just can see it.

  • icon

    it's not the landlord being hit here, it's the tenant, it's the tenant who will have to find the extra cash either by reducing their life style or moving to a cheaper property in a cheaper area, and when you get to the lowest end of the market they will be moving into the shop door way, government's problem, not mine.

  • icon

    If tenants are credit scored properly they can afford the increase in rent. If they were not credit scored then they should not have taken on a rental beyond their means and the blame must therefor lie entirely with the agent or landlord for condoning reckless actions.

    The comments above from MW are a typical knee jerk reaction so go back to sleep MW.

  • icon

    Any increase to landlords will be passed to tenants as has always been the case and always will be.


    Thats not an option where I am, they will simply refuse to pay extra and move to a cheaper property.
    The market dictates the price that people will pay and it is always price driven here.
    Even though there is a shortage of properties to rent, demand and supply doesn't come into it, it is affordability that wins hands down every time in my area anyway?

  • icon

    This increase might add a couple of pound a month. If tenants cannot afford a couple of pound increase come review time then they shouldn't be renting.
    It's a bit like fuel prices going up, household mortgages going up, holidays going up.
    If cant afford fuel dont drive if cant afford a mortgage dont borrow, if cant afford a holiday stay at home.
    Get a council place claim benefits and get us to pay!!


    You are right here as they shouldn't really be renting that close to the line of affordability, however, you said yourself that it is not just rent going up. It all adds up and can add up very quickly in the space of a few months. Their financial position at the beginning of the tenancy could be completely different towards the end of it. Forcing tenants to claim benefits is not an option as this will just put an even greater strain on the economy.

  • icon

    Loose change compared to s24

  • James B

    Majority of landlords won’t feel it today if they are on mainstream BTL 2&5 year fix products .. landlord with portfolio loans on a margin will ..
    the last increase didn’t budge the fix rates deals out there when renewing due to market competition between lenders


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