Buy-to-let 'most likely to be hit by current financial situation'

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Buy-to-let landlords are most likely to be hardest hit by the ongoing credit crunch and rises in interest rates, a report has suggested.

The Times newspaper has said that landlords are likely to be adversely hit by the current situation in the UK market because their borrowing is typically linked to Libor, the wholesale rate at which banks lend to each other.

According to the paper, this rate hit 6.9 per cent last week and could rise again.

Jonathan Moore at Mortgages for Business told the paper: "I think a lot of borrowers will be taken by surprise when their mortgage rate goes up as a result of the current funding crisis.

"They will have already seen their payments rise on the back of Bank rate increases, and some will undoubtedly be struggling."

Tim Warrington, from the property website Landlord, added to the publication: "Some landlords have decided that the market conditions in the UK are looking bleak so they are bailing out now while they can.

"If too many do this, it could send the property market into freefall. We urge buy-to-let investors to hold their nerve through these tricky times and look on it as a long-term investment."

However, Arla recently suggested that tenant demand has outstripped supply in all areas of the rental market.

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