Rising interest rates are piling the pressure on landlords and leaving some as mortgage prisoners, according to one mortgage expert.
With most fixed rates now well over 6%, the interest costs can have tripled since some landlords' last mortgage was taken, causing a perfect storm for the PRS, says Angus Stewart, CEO of buy-to-let mortgage broker Property Master.
'While some landlords seek to increase rent, many tell us that their tenants cannot afford an increase,'� he says
'As a result, many landlords are considering whether to sell one or more of their properties, which may have the impact of making many tenants homeless,'� explains Stewart.
Property Master's customer research discovered that 40% of landlords have either recently sold or are considering selling one or more properties.
If this came to fruition, the impact would be very significant on tenants and the overall housing market, he adds.
Changes by George Osborne (pictured) to the rules on interest rate relief in 2015 had minimal impact when interest rates were low, according to Stewart, but they are now seriously impacting the profitability of a landlord's business.
'Coupled with much tougher affordability rules it means that many landlords cannot re-mortgage at current rent levels, leaving them on the lender's standard variable rates, some of which are approaching 10%," he adds.
'They are mortgage prisoners, and the logical option is to sell or substantially increase rent.'�
He says: 'Recent press talk has been of helping homeowners with the increasing costs of mortgages but it's important that the government doesn't ignore landlords who are a key source of housing, with five million households.'�
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