Buy-to-let landlords facing financial cliff edge after mini-budget

theguardian.com:

Britain’s amateur landlords have benefited from years of runaway house price inflation, while intense competition among tenants has sent rents soaring. Now, thanks to the meltdown in the mortgage market triggered by last week’s disastrous mini-budget, many face a financial cliff edge.

Figures shared with the Guardian show that the number of new buy-to-let mortgage deals available has plummeted by 55% in less than a week as lenders frantically pulled products and in many cases increased prices.

Data from Moneyfacts also showed that at 4.87%, the average new two-year buy-to-let fixed rate on offer on Thursday was 68% pricier than the equivalent deal in December.

“I think there are more and more risks mounting for landlords,” Aneisha Beveridge, the head of research at the estate agent Hamptons, told the Guardian.

“The landlords who will be most at risk are those that have bought in the last couple of years and taken out the maximum loan they could get against that property.”

That could particularly apply to some who have bought in areas offering the weakest returns such as London, who were “likely to see their profits hit hardest”, she added.

Some commentators have previously put the value of the private rental sector at £1.4tn. For many small investors, their property portfolio is their main pension.

But the financial markets have signalled that the Bank of England may need to raise interest rates to 6%, while some analysts have suggested house prices could fall byup to 20%. Some investment property owners are in effect faced with two options: raise the rent in the hope that a tenant will pay it and keep the landlord in profit territory, or sell up.

The UK economists at Pantheon Macroeconomics said: “Buy-to-let landlords have