Almost two thirds of private landlords expect to see their mortgage payments increase over the next 12 months with warnings that this trend will lead to higher rents.
Research for the National Residential Landlords Association has found that, whilst over a quarter of landlords said they plan to re-mortgage over the next 12 months, 60 per cent expect their mortgage repayments to go up.
The news follows confirmation from the Bank of England that the base interest rate will stay at the 15 year-high of 5.25 per.cent.
According to data from Hamptons landlord investors across the UK are now paying £15 billion in mortgage interest on an annual basis, up 40 per cent over the course of the last year.
The buy-to-let market is especially exposed to the impact of higher interest rates, given 82% of mortgages in the sector are interest-only according to the Bank of England. This is compared to just 11 per cent for owner-occupier mortgages. As a result, the Bank warns that, in the near term, “higher rents are likely, given rising mortgage costs and strong demand.”
Despite higher rents, Savills finds that landlords’ profits are at their lowest level since 2007, indicating that rent increases are not a sign of profiteering. Rising rents largely reflect the need for landlords to cover the increased costs which they continue to face.
The NRLA calls on the Government to support the sector by scrapping tax hikes which have cut the supply of homes to rent and led to rising rents.
Association chief executive Ben Beadle says: “Higher interest rates put continued pressure on renters, as landlords are simply unable to afford growing mortgage costs.
“Ministers need to accept that tax hikes on the sector have also played a major role in the affordability challenges we now see across the rental market.
“It’s time to reverse course and develop pro-growth tax measures. Without them it is renters who will continue to struggle as demand outstrips supply and rents go up.”
Research by Capital Economics for the NRLA found that removing the three percentage point stamp duty levy on the purchase of additional homes would see almost 900,000 new private rented homes made available across the UK over the next 10 years. As a result of increases in income and corporation tax receipts, the modelling suggests this would lead to a £10 billion boost to Treasury revenue over the same period.
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This is Beadle’s campaign for 2024? Obviously given up on retaining Section 21. 😟 no mention of landlords selling up because of the RRB and fears of Labour gaining power? Not impressed and not likely to stay a member in 2025 the way he is going.
Mine went up this year for the first time in ages, planned for next year also, and as long as I hold them ( not too long now 💵💵).
Mine are now going up every year, previously none had gone up in over ten years.
Well done Gove, Beadle, Twomey, Neate, Craw and all.
Yes mine also going up another 10% this year, due to section 21 and interest rates. Sorry about that but it's still only a fraction of the costs I have had to absorb. I am banking on interest rates coming down but if they don't it's sell sell sell.
Not news really, most landlords are not putting the rents up sufficiently to cover the entire mortgage increases, so tenants will be facing similar rises again in 2025 too. All thanks to government incompetence.
Mine are also going up by min 10% and even this nowhere near covers the true increase in costs. It’s not just Mortgage rates affecting my decision, there are multiple factors at play not least the huge increase in overall ‘risk’ that has almost undermined BTL. My trajectory is sell, sell, sell. I refuse to be abused by Gov, Shelter, Gen rant etc.
Mine are going up and it's not because of interest rates, it's all the extra hassell being thrown at us by government, shelter etc, make my life difficult and some one will pay for it in hard cash
Yes, you have to factor in the risk element, which is very high where I am here in Wales.
What with Plaid Cymru asking for a freeze in rents and evictions during the winter months, I am forced to raise my rents substantially next year.
I have also had to pay out thousands for new contracts and the electrics to be brought up to date in order to obtain a certificate, to satisfy the new regulations.
I am way off the local rents being charged, so I have to bring them up to date, for fear of further legislation limiting rent rises to a few percentage points each year.
I have never increased rent during a tenancy and rarely, once in twenty years, issued a Section 21 Notice. The majority of my tenants have been excellent tenants, even the student.😉 Have I just been lucky or do my properties attract upper end of tenants?
As Shane points out, you need to rethink your strategy.
You won't be thanked for your benevolence, when you are struggling to make any kind of profit.
I am making a very nice profit thanks, even on the mortgaged property. I am not, what I would call benevolent, however when something goes wrong I get it fixed or replaced. That is what they pay top rent for.
Lucky I would say, as tenants who appear "upper end" can turn out to be not so good.
Put them up whilst you still can..... Here in Scotland we can only increase rent by 3% per year... Not nearly enough to cover landlords increasing overheads
Great Advice Shane thank you
I've just started a discussion with my last remaining Tenants...Rent was 750 for a lovely 3 bed semi in a lovely Nottinghamshire village....I proposed 840 , which seems market rate. Unfortunately my tenants think that's unreasonable and have said they'll look at other property in the new year. Clearly they have no idea that firstly they won't find one, secondly it won't have a beautiful interior and thirdly rents are going up by the month....They are both working full time with no children so why do I feel guilty??? If all tenants think like mine and have no idea WHY rent is going up then 2024 will be another long Year of Landlord Bashing. My dilemma...if they leave should I sell my last remaining property?????
If it is mortgaged, sell while you can.
I can see why they think it's quite a big rise (12%) but tenants don't monitor the market & think 'Hey I'm on a good deal!' That's why mine go up every year. Tenants get used to a regular rent rise & by putting it up each year I avoid the big rise that causes offence. I bet once they start looking they agree to your new rent!
Call their bluff let them look around for somewhere else then they'll wise up
It's your tenants who are being unreasonable, so don't feel guilty. They will be lucky to find anything comparable, they clearly have no idea what has happened in the last few years. Not a great time to sell, so I'd rent for another year or 2 at market rate.
I'd say the majority of tenants are aware that rents have gone up. I put mine up over 10% last year and they all accepted the increase.
Can’t understand why they want maximum homelessness.
Every Policy they have is geared to that end and is very successful.
They have just devised anti-landlord policies and not pro-tenant ones, as somebody else said on here once.
Perhaps it is because they want to get rid of us, and our tenants are collateral damage.
The rental market could be so simple if you let it. Reduce costs and red tape for landlords, more landlords enter the market which in turn means more properties available. Supply outstrips demand and so landlords have to start reducing prices and making the properties more appealing to attract tenants who now have a choice of good quality properties available to them at a good price.
I don’t know why this is so difficult for politicians to understand. They can’t be that stupid, they just need to grow a pair and stand up to the activist charities who revel in misery as it means more donations and support for their now “essential services”.
Until October 2022 I very rarely increased rents for existing tenants. Several hadn't had an increase for well over 5 years.
A lot of mine are bills inclusive so when all the small utility providers went bust and didn't honour the contracts I had signed I was looking at the utility bills rising from £8000 to £35000 a year.
About 12 tenants had increases in October 2022 of between £25 and £70 per month. Nowhere close to the utility increases but every little helps.
In April 2023 another batch had 7% increases as that's what Social tenants were all getting so anything less would have been totally unrealistic.
The October batch was 9% as the BoE had been incessant.
Five of my mortgages came off their fixes this year and while previously they were between 1.99% and 3.55% the new rates range from 4.28% to 6.39%. I've managed to shuffle some of it off the most expensive HMO products onto family let properties but it's still much higher payments than the rent increases have been.
So rent increases are now required for the foreseeable to cover the extra costs plus the extra Section 24 tax and prepare for the next batch of mortgage fixes ending in 2027.
The war on landlords is part vote winning on the part of all the parties, and part anti- landlord left wing liberal marxist
" property is theft ideology".
It doesn't help what's being taught in schools and Uni's these days.
Maximum homeless Policy in full flow every requirement is designed to may it happen and very successful.
Ok so you had a license multiple times before but now up for renewal and they keep turning the screw.
So you give them the DEICR, inter linked fire alarms Certs, the Emergency lights Cert, Gas Cert, EPC. Copy of your Tenancy Agreement, record of payments and proof, the Application form and their Application outrageous fee plus all your other administration time
consuming thankless work but still not enough they want
more cost fire assessment Another £250.00 and your free attendance time, not finished yet they want your ASB Policy to keep log book of all incidents for 5 years. So they think we have nothing better to be doing who runs the show buys or built the property maintains, furnished does everything yy morons your not fit to lick our boots you useless excuse for regulators. 10’000 sleeping rough in London directly because of you hiding behind Computerising in your bed room.
The problem is if you have had to remortgage now at a far higher rate than you were on previously, then the damage has been done!
Taking out a 5 yr fix at something in the high 5%'s or even higher, when you were on a rate around say 3%, means for the next 5 yrs your payments won't be coming down even if rates do, so rents will need to continue to rise to try and get back some of that increase.
For portfolio Landlord's you have an option to sell a property or 2 and de-leverage your remaining mortgaged properties. I will partially be doing this as well as reducing my own mortgage. I will also have a bloody good holiday or two and reap some rewards for all the hard graft i've put in over the years.
One thing that none of us can allow for and that is any Government being on our side!
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