An international ratings agency has given its verdict on investors’ prospects for the UK buy to let market.

The Kroll Bond Rating Agency (KBRA) is a global ratings service offering advice to investors. Its most recent report explores the regulatory and financial difficulties facing investors in the UK buy to let sector in a climate of economic difficulties from rising interest rates, slowing house price growth, and an increased cost of living affecting tenants. 

The report stated: ‘This has created a challenging landscape for landlords, especially those looking to remortgage in this new environment. In addition, regulators have altered policies to try and ensure higher quality BTL mortgage origination, including energy-efficiency improvements for older properties.’

KBRA reviewed nearly 20,000 BTL loans and found that 20.3% may have a higher remortgage risk factor due to relatively low debt service coverage ratios or high LTV levels. It added that, within the subset of soon-to-end fixed rate BTLs, the exposure in London is ‘fairly high’.

There are further looming risks that cloud the BTL sector, including changes to tenancy rights, taxation, and energy-efficiency regulations.