Bank of England warn of double whammy for landlords

The Bank of England’s latest Financial Stability Report warns of the chaos to come as landlords are hit with the double whammy of higher interest rates and both tax and regulatory changes, stating that landlords who rely on finance to keep their portfolios afloat will be facing a huge squeeze by the end of 2025 with monthly payments on buy-to-let deals predicted to jump £275.

The Bank says: “A landlord with high debt-servicing costs relative to their rental income (ie a low ICR) is more likely to experience repayment difficulties.

“As with owner occupier mortgages, higher interest rates mean an increase in mortgage servicing costs when fixed rate deals need to be refinanced, and most buy-to-let mortgages are interest only, which increases the relative impact of higher rates.

The average increase in monthly repayments is projected to be around £275.”

The average increase in monthly repayments on buy-to-let mortgages by the end of 2025 is projected to be around £275.

“If landlords were to entirely absorb higher mortgage costs (ie without passing any of them on to renters), the share of buy-to-letmortgages with ICRs below 125% would increase significantly from around 3% at the end of 2022 to just over 40% by the end of 2025.”



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