Landlords are sounding the alarm as buy-to-let mortgage rates skyrocket, threatening their financial stability. Many landlords are being forced to sell their properties at discounts of up to 25% as lenders withdraw over 275 buy-to-let deals and increase interest rates by up to 1.57% in just two weeks. The surge in costs means that landlords are seeing their profits diminish rapidly, with some even falling into debt. The average two-year fixed rate mortgage has risen to 6.1%, up from 5.56% last month and 2.96% two years ago. These rising costs have been compounded by other challenges faced by landlords, such as tax relief reductions and stricter regulations. As a result, many landlords are choosing to sell their properties, adding to the already decreasing pool of rental options. This has led to an increase in rent prices, with the average rent on new rentals rising by 9.1% compared to the previous year. The situation is causing concern for both landlords and tenants alike. Landlords are struggling to pass on their increased costs to tenants who are already struggling with the rising cost of living. Many landlords plan to reduce the number of properties they rent out, leading to a shortage of rental options. Landlords who bought properties before the end of the stamp duty holiday are now facing the prospect of remortgaging at rates higher than 6%, causing further financial strain. Despite these challenges, some landlords see the current climate as a buying opportunity, particularly for those with significant equity. To increase the chances of success, experts recommend buying properties with plenty of equity to protect against rising mortgage rates and factoring in additional funds for maintenance and improvements. They also advise researching the location and understanding the rules and regulations that apply to rental properties.
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