Nearly one in three (31%) private rented sector landlords rate their expectations of the UK’s financial markets as either “good” or “very good” in the coming months, according to research by the National Landlords Association. This is 21% higher than the same time last year.
This confidence is reflected by the fact that 27% of respondents told the survey that they plan to aquire new property over the coming year. However, it was also found that just a modest increase in interest rates would place a significant financial strain on many landlords.
A 2% rise in the interest rate would leave 21% of landlords struggling to keep up with mortgage repayments. At 2.5%, over a third (35%) would find it difficult. At 3%, it goes up to 42%.
Although this isn’t a concern in the near future, with the Bank of England recently revealing its intention to keep the interest rate at 0.5% until late 2015, a rise in the interest rate is inevitable. It is therefore very important to keep the long-term sustainability of your business in the forefront of your mind if considering an investment in the buy-to-let sector.
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