Tenants could face a sharp rise in rent as landlords contend with soaring buy-to-let mortgage costs, says estate and lettings agent Barrows and Forrester.
In December 2021, the average cost of a buy-to-let investment saw landlords paying £942 a month as a full mortgage repayment, or £486 per month as an interest-only mortgage repayment. However, the cost of living crisis and a sharp jump in mortgage rates in recent months means that the same mortgage on the current average house price of £289,818 would require a full monthly repayment of £1,133, or a monthly interest-only payment of £703.
It equates to a 20.1% increase in the average monthly cost of a full monthly repayment and a 44.6% increase on the average monthly interest-only repayment.
Despite this, the average monthly cost of renting across the UK market has increased by just £124 per month to £1,184.
However, Barrows and Forrester warned that those who would have secured a more favourable rate prior to the first interest hike in December 2021 could be approaching the end of their fixed term this year, meaning tenants could be facing higher rents, with landlords forced to cover the higher cost of borrowing.
