The Bank of England (BoE) Monetary Policy Committee has voted to increase the base rate for only the second time in a decade.
The decision to increase rates from 0.5% to 0.75% means that rates are above half of 1% for the first time since March 2009.
Of course 0.75 per cent is still an historically low interest rate and landlords should have no need to panic just yet.
Interest rates have been, and remain, incredibly low compared with recent history, leading to concerns that the sustained period of very affordable finance may have bred complacency amongst some in the landlord community.
According to National Landlord Association (NLA) research*, the average value of buy to let mortgages held by a private landlord in the UK is in the region of £464,000. This means that an additional quarter of one per cent will cost an additional £1,160 per annum.
Looking at individual rental property investments, typical borrowing equates to around £77,000. For a mortgage of this size, a 0.25 per cent increase equates to additional costs of around £16 per month.
Bearing in mind that HM Treasury is currently phasing out traditional finance cost relief, it will not take many additional ‘small’ increases before landlords, and their tenants start to feel the pinch.Chris Norris, Director of Policy and Practice at the NLA
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