One in four landlords have admitted rents from tenants are barely covering their mortgage repayments and any interest rate rises could spell disaster, according to flat and house share website Spareroom.co.uk.

Research by Spareroom.co.uk found that 41% of landlords are only just meeting mortgage payments, while 43% said rents would no longer cover their mortgages if interest rates increased by 2%.

Some landlords admitted to standing even closer to the precipice, with 22% saying an interest rate rise of 1% would lead to rents not covering mortgages, while 10% said a rate rise of just 0.5% would create a shortfall.

The Bank of England’s Monetary Policy Committee has held interest rates at 0.5% for 16 months and is likely to maintain the rate for the time being. However, commentators agree interest rates must rise eventually.

Concerns over mortgage payments and potential rate rises have led 63% of landlords to increase rents in the past six months, with 21% admitting they have or plan to hike rents by 5% this year. A further 18% plan increases of between 3% and 5%.

However, over half of landlords said they are worried increasing rents could lose them loyal and valuable tenants.

Matt Hutchinson, director of Spareroom.co.uk, said: “Britain’s landlords are in a Catch 22. On the one hand, the rise in Capital Gains Tax for higher rate taxpayers means that many landlords either won’t be able to sell their buy-to-let properties full stop or will sell at a far greater loss. At the same time, holding onto their properties means they are at the mercy of the Bank of England and facing higher mortgage payments.

“For many landlords, it is hard to know which way to turn, and it could be that tenants feel the full force of landlords’ financial strain. The vast majority of landlords who have good relationships with their tenants don’t want to force the rent up, but for those who are struggling to make ends meet, it’s the only option.”