INDUSTRY NEWS

‘Perfect storm’ warning as Middle East conflict hits mortgage rates

31 March 2026

Ministers must take action to tackle rising costs in the rental market, following warnings the conflict in the Middle East is seeing borrowing costs ‘soar’.

According to financial advice website, Moneyfacts the unrest has caused ‘absolute mayhem’ in the residential mortgage market, with buy-to-let rates are also being hiked. This, it claims, means landlords taking out a mortgage now face paying an average of £1,100 more a year than they would have at the start of March.

We are now warning the Government that landlords, already under pressure from tax changes and regulatory reform – could be left with no option but to raise rents to cover increasing costs.

Pressure ramping up

Changes set to impact landlords in the months and years ahead include:

A planned increase in income tax paid on rental income from next year, which the independent Office for Budget Responsibility has warned will lead to higher rents.
Uncertainty over the costs landlords will need to pay to join the planned Private Rented Sector Ombudsman and database as outlined in the Renters’ Rights Act.
Bills of up to £10,000 per property to meet new energy efficiency requirements.

We have also taken the opportunity to counter the notion that landlords are ‘fat cats’ with the disposable income to cover rising bills, with HM Revenue and Customs recording the average rental income declared by unincorporated landlords at just £19,400 a year – significantly less than someone earns from a full-time minimum wage salary.

What needs to happen?

We are now calling on the Government to develop a plan to reduce cost pressures faced by landlords. We propose it:

Scraps next year’s income tax hike on the sector.
Keeps the costs of joining the private rented sector Ombudsman and database as low as possible.
Reforms the tax system to ensure it better supports proactive energy efficiency improvements to homes to rent.
Supports low-income tenants by unfreezing housing benefit rates.

Positive action

Our chief executive Ben Beadle said: “Whilst the Government cannot be held responsible for the impact of the conflict in the Middle East, it should take action where its own policies will lead to higher rents.

“Growing taxes, uncertain costs associated with the Renters’ Rights Act and the ongoing housing benefit freeze will create the perfect storm for tenants.

“With so many people reliant on the sector for a place to call home, ministers need to recognise the real-world consequences of their decisions.

“It is simply stereotyped nonsense that every landlord can somehow absorb ever-increasing costs indefinitely. They can’t, and as a result, it is tenants who will suffer most as rents continue to creep up.

“The Government needs to take action to support renters and ensure a healthy, vibrant market."