As a buy-to-let landlord is your business strategy strong enough to cope with the improving property market and anticipated interest rate rises? This is the question that Landlord Assist, specialists in tenant referencing and eviction, wants landlords to ask themselves. With many people still being forced to rent instead of being able to buy property, the demand for rentals and the monthly income and potential yields available has encouraged many new landlords to enter the arena, who may not now be properly prepared, having been enticed to borrow extra from lenders. You may well have been one of the people attracted to the industry after hearing mention of the “buy-to-let property bubble” and £50 daily property price rises, but it’s important that you now take note of the impending situation and take measures to protect yourself financially.

Falling Tenant Numbers and Rising Interest Rates

Falling Tenant Numbers and Rising Interest Rates

Predicted changes to the market and interest rates

It is difficult to know how much longer growth in private rentals can continue, but there are indications that this may end sooner than you may have thought. Certainly the Help to Buy initiative, designed to assist tenants to finally be able to secure their own property, may well cause a slowdown in the rental market, with lower demand for rental properties leading to small fall in monthly rent prices. The Bank of England has also suggested that interest rates could rise sooner than they originally expected owing to stronger economic recovery. Even though the Bank of England’s base rate has remained steady, some landlords have already been faced with almost doubling of their mortgage repayments thanks to tracker rate rises made by the Bank of Ireland and the West Brom; if other lenders were to follow their lead this would place many more landlords under tremendous pressure. The combination of rising repayments on buy-to-let mortgages with falling rental incomes and possible void periods could have a significant impact on your business and could see you potentially facing difficulties in making your mortgage repayments unless you have a robust strategy in place to protect yourself.

Financial protection strategy

Now is the time to think carefully about your current business strategy and how the predicted changes that are looming would likely have an impact on your finances. If you are a landlord with a number of properties financed through tracker mortgages, you would be wise to consider remortgaging to achieve a fixed rate; this would protect you from likely interest rate rises or unanticipated price rises set by your lender. Taking such a step would provide a safeguard to help you reduce the risk of struggling financially.

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