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  • Writer's pictureMatthew Pigrome

Rising Interest Rates Put Pressure on Landlords and Rental Market, Surveyors Warn

According to the Royal Institution of Chartered Surveyors (RICS), the increasing interest rates are creating challenges for landlords, leading some to consider selling their properties. This trend could further tighten the availability of rental homes and potentially raise costs for tenants.

The uncertainty surrounding the UK housing market has prompted concerns, with RICS stating that "storm clouds have gathered." Lenders are predicting further interest rate hikes by the Bank of England due to prolonged inflationary pressures, which have slowed down more gradually than anticipated.

The impact of rising mortgage costs is not limited to homebuyers and those seeking to remortgage; it also affects landlords and individuals with buy-to-let properties. As rental supply continues to shrink, the Renters Reform Bill, alongside higher costs, is expected to exacerbate the situation, according to RICS.

Tarrant Parsons, Senior Economist at RICS, noted, "Interest rate rises are also impacting the rental sector, and combined with looming reforms proposed in the government's Renters (Reform) Bill, landlords are increasingly deciding to leave the sector and sell their properties, causing further constraints to lettings supply."

Additionally, a proposed law seeks to ban no-fault evictions in England, removing landlords' ability to evict tenants without justification. These factors, coupled with rising mortgage rates, may contribute to a slowdown in the housing market, as potential buyers struggle to secure suitable mortgages or opt to wait for rates to decrease.

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, highlighted the potential implications, stating, "Given that rent absorbs a far bigger chunk of people's incomes than mortgages, these hikes will add insult to injury. It's going to make it even more difficult for renters to stay on top of their finances."

RICS emphasised that the challenging environment is not limited to landlords, as homeowners seeking new fixed deals also face higher mortgage rates. Brokers caution against moving to standard variable rates, as they could result in significant increases, particularly for those unable to refinance or qualify for rate switches.

Many individuals, including older borrowers who cannot refinance and homeowners ineligible for rate switches after their fixed deals expire, find themselves trapped in high standard variable rates.

As the housing market faces mounting pressures, individuals and stakeholders are closely monitoring developments and their potential impact.

Don't let rising interest rates catch you off guard. Contact Mortgage321 today to explore your options and secure a competitive mortgage deal that suits your needs.


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