The Bank of England has warned that landlords with mortgages are under increasing strain from higher interest payments and ‘other structural factors’, all of which are ‘likely to put pressure on their incomes”.

The commentary is within the bank’s latest Financial Stability Report, which warns higher costs for landlords could cause them to sell, “putting downward pressure on house prices”.

It also predicts that average monthly payments on buy-to-let mortgages will increase by around £275 by the end of 2025, warning that landlords may “seek to continue to pass on higher costs to renters,” it says.

“Similar to other forms of borrowing, buy-to-let mortgages are subject to affordability testing.”

Outstripping supply

Ben Beadle, Chief Executive of the National Residential Landlords Association (pictured), says: “Growing mortgage costs are putting responsible landlords in an impossible position.

“Either they leave the market at a time when demand for rented housing is already outstripping supply, increase rents, or soak up growing costs which many simply cannot afford.

“Whilst help has been provided for homeowners in the form of the Government’s Mortgage Charter, nothing has been done to support the private rented sector.

“It is vital that ministers step in to protect the market from the impact of growing costs.

“For renters, housing benefit rates need to be unfrozen without delay to ensure they can cover their rent payments. Alongside this, tax hikes on the sector need to be scrapped to boost the supply of homes to rent that tenants desperately need.”

Read more about rising interest rates.