One in three buy-to-let landlords are struggling to remortgage after failing their lender’s affordability test, warns Mortgages for Business.

Fresh research by the buy-to-let specialist, carried out on behalf of the Daily Mail, found that some investors are being forced to accept variable rates as high as 9.5% as a result of failing affordability tests for remortgages. Others are selling up because they can no longer afford their loans.

Gavin Richardson, MD of Mortgages for Business, said: “It’s a critical situation for small landlords at the moment. They are worried about Section 21 reform and EPC regulations and tax.  On top of that, they’re having to worry about higher mortgage rates.  They’re right to be worried.

“We’re seeing landlords coming off rates of 3.5% and being unable to remortgage because, according to the lender’s stress test, their loan is no longer affordable. Unable to secure a new deal and with nowhere else to go their loans are reverting to the lenders standard variable rate, which average about 7.5%.

“In fact, in the worst case scenario, they are moving to their lender’s standard variable rate at rates as high as 9.5%. Their only other options are to pay a socking-great fee to secure a more reasonable interest rate, which can cost them tens of thousands of pounds.  Or they can sell up and go home.”

“The money markets are proving tricky for lenders to navigate and many are sticking with ‘computer says no’. Having a good broker has never been important,” he added.