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Soaring buy-to-let mortgage interest rates could make finding properties harder for tenants as landlords need to push up rents to cover rising costs.
MPs have heard that the rising cost of living could seriously impact the availability of homes to rent as the latest Bank of England official interest rate hits the highest level for more than 30 years with a 0.75 per cent hike.
Landlords and renters face a torrid time.
As inflation rages at 10.7 per cent, whipping up food and energy prices, renters are already struggling to keep their heads above water.
Landlords have a stark choice - swallow the rise in mortgage costs or pass the amount in whole or part to renters.
The MPs sitting on the Commons Treasury Committee were told by Ray Boulger of mortgage broker John Charcol that landlords were reluctant to hold or buy new buy-to-let properties and that this would affect rents and rental property available in the future.
Boulger's comments were part of evidence from various sources heard by the committee in a session reviewing the state of the private rented sector following the bombshell budget dropped by former chancellor Kwasi Kwarteng a few weeks ago.
Mortgage costs across the board - including buy-to-let loans - have rocketed in recent weeks as investors and global markets were rocked by his planned tax cuts to stimulate economic growth.
On December 1, the average two-year fixed rate deal was priced between 2 and 2.5 per cent. By the end of September, the rate had climbed to 4.75 per cent and currently stands at around 6.4 per cent.
Boulger argued landlords would suffer more than homeowners as lenders will demand they pay more extensive cash deposits - up to 40 or 50 per cent of a home's value, compared to 25 or 30 per cent deals seen only a few weeks ago.
He explained around 40 per cent of landlords have buy-to-let mortgages, and many are fixed rates coming to an end over the coming months. As a result, these landlords face considerable rises in mortgage costs as they refinance their deals.
Not only mortgages are impacted, he said, as his firm expects a 10 to 15 per cent home price slump as affordable mortgages dry up.
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The 0.75 per cent interest rate rise is the most significant jump since 1989.
Announcing the hike, the Bank of England warned the UK economy was lurching towards a worst-ever two-year recession.
The Bank feels inflation will "fall sharply to some way below the two per cent target in two years, and further below the target in three years."
Typically, an economy grows, and this is because consumers become richer as their wages rise. Conversely, a recession is when an economy posts three successive quarters of shrinking output, and figures for the last quarter revealed a 0.3 per cent fall in output.
Experts at the International Monetary Fund confirm other countries are struggling with energy costs, rising food prices and general economic malaise. In addition, a report suggests the global economy is slowing, partly due to COVID shutdowns and the war between Russia and Ukraine. Both countries are significant suppliers of wheat and sunflower oil.
Landlords are affected by limits on mortgage funding, rising interest rates and a squeeze on tenant finances, making paying rent harder. In addition, a recession usually means unemployment increases, so many tenants could lose their jobs.
Generally, if the economy is in recession, the Bank cuts interest rates to encourage consumer spending. This time, the country has raging inflation and a slowing economy called stagflation - a combination of stagnation and inflation. The Bank has chosen to increase interest rates, which could negatively impact the economy.