The Bank of England’s decision to increase interest rates by a quarter of a percent yesterday from 0.5% to 0.75% will impact on both buy to let property owners and potentially tenants according to accountants Blick Rothenberg.
A spokesperson from the firm said: “For many people who were getting no return on their capital due to long term low interest rates and decided to invest in buy-to-let properties, this will be another blow.
“They wanted to get better returns and for many it was also part of their retirement plans’.
He added that the increase in the Bank of England base rate will have a knock on effect on mortgages for thousands of people, saying: “Those buy to let investors with mortgages may be some of the worse affected as not only do they have to deal with increased interest repayments, they will also be dealing with the fact that for the current tax year, they will only receive full interest relief on 50% of the cost of interest incurred, with the other 50% only receiving basic rate tax relief.
“The amount liable to full interest relief will reduce by a further 25% from April 2019 and from April 2020, interest incurred will only attract basic rate tax relief.
“Once they see the reduced profits, they could put up rents to ensure their yields, which will be bad news for those renting and trying to save for properties of their own.”