Buy-to-let affected by rising interest rates

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by Kay Murchie

The quarterly lettings survey produced by The Royal Institution of Chartered Surveyors (Rics) has established that a rising number of buy-to-let landlords are selling their properties due to rising interest rates.

The percentage of landlords selling their properties has increased from 4.1% to 5.2% in just 12 months. Only 7% of its members reported an increase in landlords taking on property in the UK compared with 10% in the previous quarter. A “sharp fall in yields” was also noted by Rics which has arisen as a result of slowing rental growth together with strong house price inflation.

Jeremy Leaf, a Rics spokesperson, highlighted that housebuyers are returning to the market in order to avoid rising borrowing costs, this is signalling a fall in demand for rental property.

A sharp fall in yields, further interest rate rises and increasing borrowing costs have added to a distressing time for landlords. However, an active housing market and the strength of the economy should ensure an easier time for many.