Buy-to-let 'to benefit' from rate rises

Posted: 06 Jul 2007 16:51:54 GMT

The buy-to-let market is likely to benefit significantly as interest rates continue to rise, one mortgage lender has claimed.

The buy-to-let market is likely to benefit significantly as interest rates continue to rise, one mortgage lender has claimed.

Rising interest rates are succeeding in discouraging many from taking on their own mortgage, UCB Home Loans said, meaning that demand for rental space is likely to increase significantly as hopeful first-time buyer seek accommodation.

"The combination of high house prices and more expensive loans is pushing more people into the rental market, where, as tenants, their overall outgoings are generally lower than those of homeowners," said Keith Astill, managing director at UCB Home Loans.

"Ironically, people are renting for longer because it's more difficult to afford to buy, which is in turn providing a boost to the buy-to-let sector."

Landlords are therefore likely to have mixed feelings about the new 5.75 per cent base rate, which will both increase their buy-to-let mortgage costs and increase demand from tenants.

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