Why it can only get worse for buy-to-let investors

The situation is looking bad for Britain's 400,000 buy-to-let investors. Not only are many struggling to cover mortgage repayments, some are set to lose out on capital gains too.

The situation is looking grim for Britain's 400,000 buy-to-let investors and it's set to get worse. With interest rates now a full percentage point higher than they were last year, many landlords are finding that rental income doesn't cover their mortgage repayments.

"The buy-to-let market is certainly getting tougher," says Melanie Bien from Savills in The Observer. Large numbers of buy-to-let investors are coming to the end of their fixed-interest periods and face the looming problem of higher monthly repayments. For example, the increase in the base rate to 5.5% has added £125 a month to repayments on an interest-only, variable-rate mortgage of £150,000.

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