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The rent most landlords receive is just servicing the interest on their mortgages

The rental income received by 79% of landlords with mortgages is only sufficient to service the interest element of their loans, and not pay down their debts, as they contend with rising costs, according to new research.

The data, unearthed by the National Landlords Association (NLA), has prompted the association to examine the narrative that tenants are just paying off their landlord’s mortgage.

In a discussion paper launched in London this week, the NLA and PricedOut, the campaign for affordable housing, looked at both sides of the argument.


The NLA holds that there are many costs to running a successful lettings business that tenants are either unaware of or do not consider in this debate.

Richard Lambert, CEO of the NLA, said: “There are myriad costs to running a letting business, including maintenance, repairs and upgrades, licensing, and insurance. Rents have to cover all these costs, as well as the interest on a mortgage, where there is one.

“Housing is expensive for everyone at present. The government needs to encourage the supply of housing in all tenures, including the private rented sector.”

The NLA, in the discussion paper, recommends that the government allows more time for existing policies to bed in (five years), and evaluate their effectiveness, before new policies and regulations are made.

Encourage building more housing of all tenures by simplifying planning and borrowing rules.

Stop taxing professional landlords out of the market. The loss of good landlords will not make renting more affordable; it will simply drive up the cost for those who want to access decent rented homes.

For more information or to view the discussion paper, click here.

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

Poll: Do you agree that the government needs to encourage the supply of housing in all tenures, including the private rented sector?


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    "Stop taxing professional landlords out of the market"? Who then should be taxed more, in that case? Those who cannot afford to buy any home at all? And of course many landlords buy their homes to let out without any mortgage or loan. to pay back. With property prices generally increasing way ahead of inflation over the long term, landlords will all win, of course. Sorry, but a progressive tax scheme demands that those with the biggest shoulders should bear the greatest burden. It's called 'fair'. I say that as a landlord myself. It's a complete privilege to be able to own more than one home.


    Why should those that have more pay more?

    That is not fair. Fair is everyone pays the same! All it does is discourage those at the bottom of the ladder from working hard and saving for their own property!


    David. Join the real world and look at the evidence. Whilst there is a shortage of homes, rents will always rise to cover costs including taxes, so tenants end up worse off. The fact that 100% of respondents agree more homes need built proves most landlords are fair and decent. Many tenants live in rental properties they couldn't afford to buy, lease cars they couldn't afford to buy and spend all their spare cash on expensive holidays, coffees and nights out. They should thank God for sensible landlords subsidising their profligate lifestyles!


    How is taxing invisible money fair and having tax bills over 100% profit fair ? You pay tax on profit and not allowing you to deduct the costs to arrive at that profit is bordering on criminal. What is not reported is it is going to be the largest portfolio landlords that are going to be hit hardest and they like me are the landlords that house the most people lucky I have incorporated but many haven’t been that lucky carnage awaits next year

  • David Lester

    My wife and I are in the property business for profit not as a charity, mortgage interest is a cost of sale and should be accounted for as such!

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    I am glad that I own all my properties outright, as in my area, it is almost impossible to pass on rising costs with rent increases.
    If I had a mortgage on any of them at their current values, I would definitely be in negative territory.
    My last property took three months to rent back out and I currently have another two available, which probably won't go now until after Christmas.

  • icon

    Taking out a large mortgage in order to become a landlord is the wrong way to do it, i've bought my properties slowly over the past 30yrs for cash, while i was working the rent i was receiving was rolling up ready to buy the next one, today i live off the rent i receive, but there is still a surplus that rolls up to buy more. being a landlord is not a get rich quick scheme, but done correctly works very well.


    Depends how quick you want to expand the buy remortgage model worked really well untill that toad osbourne ripped up age old accountancy principles. Not being able to deduct your largest cost is going to cause carnage starting next jan when first tax bills hit. Your model is another great way just more slow and long term.


    Andrew. I usually agree with your comments but don't on this occasion. I have always used the leverage of high LTV mortgages to increase my portfolio as I pay around 2% interest on them but get up to 10% yield on renting them out. Over the last 20 plus years they have grown in value by 300 to 400%, so an initial investment of around £12000 on a £50000 flat in 1997 would have grown to equity of over £150000 on a £200000 flat yielding £25000 per annum gross rent. However, by remortgaging, that same £12000 of my money has been augmented by around £1 million of mortgage finance to build up equity of around £2 million in a £3 million portfolio, yielding close on £250000 gross rental income. I therefore believe it's better to use the money saved by the over cautious risk averse savers to multiply the return on my own more sensibly invested funds.

  • G romit

    "The rental income received by 79% of landlords with mortgages is only sufficient to service the interest element of their loans,"

    If this is true then it is a timebomb about to go off. s.24 has barely started, and the first tax bill with s.24 effective will only be hitting the doormat in the next few months. The Government knows this, so why are they proceeding with it? For sure it not "to level the playing field between Landlords and home-owners". Is it to push up rents so that the BTR can make more profit (and bigger Tory party donations, and lucrative non-exec Directorships when minister stand down)? - hmmmmm!


    It stinks and the people who suffer the most are poor tenants with rent increases and evictions shameful self serving Tory’s


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