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Landlords are ‘being pushed out of’ the PRS

Nov 3, 2023

The Government’s inaction and the rising interest rates are driving landlords out of the rental market, according to a new report.

The study by Yorkshire Building Society (YBS) revealed that more than half of landlords feel they are being ‘squeezed out’ of the sector and most of them think it is becoming ‘less appealing’.

The cost of borrowing has gone up 14 times since December 2021, when it was at a record low of 0.1%.

The Bank of England kept the base rate at 5.25% yesterday, the same as last month.

‘Landlords are navigating a complex financial landscape’

The chief operating officer at home buyer UPSTIX, Fred Jones, said: “Landlords are navigating a complex financial landscape marked by rising interest rates and evolving market dynamics.

“These challenges have led to significant financial strain for many in the sector as well as emotional strain of the obligation many feel for their tenants.

“Considering these difficulties, it’s essential to provide landlords with a clear understanding of the situation.”

He added that landlords should consider practical solutions, including selling up with a sitting tenant.

Landlords are facing ‘unprecedented financial pressure’

Mr Jones was responding to the YBS report which said that landlords are facing ‘unprecedented financial pressure’ and they have to ‘refinance their existing loans in a more expensive and uncertain rate environment’.

It also said that landlords need to be ‘more realistic’ about the housing market and their prospects, as many of them are ‘too optimistic’ about property prices rising in the next year, despite some experts predicting significant drops.

Speaking on BBC Radio 4’s Today programme, Ben Merritt, the director of mortgages at YBS, said: “It’s a really difficult time for both residential borrowers and landlords.”

‘Many landlords now are actually losing money’

He added: “Interest rates are two to three times what they were just a few years ago and the abolition of being able to offset your mortgage interest against expenses means many landlords now are actually losing money.”

Mr Merritt continued: “The big challenge with this is the availability of more appropriate rental properties for those that can’t buy a property.

“We’ve found that 60% of people think they are being pushed out of [the buy to let sector]. There is potentially an implication for available housing for renters in the future.”

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