Warning to Buy To Let sector - this interest rate rise isn’t the last…

The chief executive of an online mortgage broker is warning that yesterday’s base rate rise announced by the Bank of England will not be the last.

Angus Stewart of Property Master says the Bank’s monetary policy committee’s decision to increase the base rate by a further quarter per cent from 0.5 to 0.75 per cent: “This is the third base rate rise in little over three months and sadly we do not expect it to be the last.  

“Lenders were slower than we expected in reflecting the changed interest rate environment that began last December, but that situation has now been reversed.  There have been wholesale product pricing reviews and usually the outcome has been to increase the mortgage rate landlords will have to pay.”

He says interest rates are just one source of pain for landlords right now.

Stewart continues: “Landlords wanting to meet new energy efficiency requirements as well as the usual required maintenance are being hit with the higher costs of building materials.   

“And landlords with more than one property have been excluded for support to deal with the cost of dealing with the cladding crisis and some of those operating Houses of Multiple Occupation are seeing local councils adopt a new policy of generating a council tax bill for every room. The only obvious outcome will be increased rents and more pressure on tenants.”

Meanwhile Matt Staton, head of lettings at Berkshire Hathaway HomeServices London Kay & Co, adds: “You’d expect with rising interest rates, and all the disruption of the past few years, growth in the housing market would stall - but it continues to thrive against the odds.  

“Although we expect to see new trends emerge as economic conditions take hold in households across the country. As budgets tighten, and with increased interest rates this may result in a tilt towards rentals – as some aspiring homeowners put buying plans on ice and opt for longer tenancies.  

“With rising energy bills front of mind, renters are also likely to be more considered about their choice of property, which could see a surge in demand for more energy efficient homes and lower bills . As we navigate new economic headwinds, the real estate sector will need to brace itself for a choppy period. But even so, we expect the market to remain resilient and buoyant in the months ahead.”