A specialist buy to let mortgage broker says the government must help landlords with mortgage costs, as well as owner occupiers trying to cope with massively increased payments.
Angus Stewart, chief executive of online brokerage Property Master, says: “The continued increase in interest rates is causing a perfect storm. George Osborne’s changes to the rules on interest rate relief in 2015 had minimal impact when interest rates were low. However, they are now seriously impacting the profitability of a landlord’s business.
“Coupled with much tougher affordability rules means that many landlords cannot remortgage at current rent levels leaving them on the lender’s SVR some of which are approaching 10 per cent. They are mortgage prisoners, and the logical option is to sell or substantially increase rent.”
Recent research undertaken of Property Master customers identified 40 per cent of landlords having either recently sold or considering selling one or more properties.
Stewart says: “If this came to fruition, the impact would be very significant on tenants and the overall housing market. Recent press talk has been of helping homeowners with the increasing costs of mortgages but it’s important that the Government doesn’t ignore Landlords which are a key source of housing with five million households.”
Stewart’s comments follow yesterday’s Bank of England decision to increase base rate from 4.5 to 5.0 per cent.
This marks a 13th consecutive hike since rates were first increased in December 2021 from a low of 0.1 per cent. This is also the fifth consecutive interest rate increase seen so far in 2023, which has followed the same pattern as 2022 which saw eight consecutive base rate jumps.
As a result, the current rate of 5.0 per cent is the highest seen in over 15 years since April 2008.
Responding to the move, Ben Beadle - chief executive of the National Residential Landlords Association - comments: “This decision will add further pressure on renters and landlords alike. Some 85 per cent of buy to let mortgages are interest only, making them especially hard hit by rising mortgage costs.
“Some landlords have seen mortgage payments rise by almost 240 per cent since December 2021.
“Analysis for the NRLA has found that 735,000 rental properties could be lost across the UK if interest rates peaked at five per cent, further exacerbating the supply crisis renters are facing.
“It makes no sense to have a tax system that discourages investment in the homes renters need, and benefit payments that fail to provide vulnerable tenants with the assurance that they can afford their rents. The Chancellor needs to take urgent action to support the rental market by reintroducing mortgage interest relief in full and unfreezing housing benefit rates.”
Meanwhile lettings agency Leaders Romans Group has released findings from a survey of landlords of 380 privately rented properties who are registered with LRG brands.
It says only 68 per cent definitely plan to maintain their portfolio over the next year.
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Our government serve only one puppet master , and it ain't us plebs
It’s so easy for Government to help landlords just remove what they done that cause the problems.
Scrap THE RENTERS REFORM BILL, SCRAP SECTION 24, REINSTATE SECTION 21 FULLY,
now that was easy the Recession over and the Country back on its feet again.
Dream on, It aint going to happen.
All these lefty people (including Tories) want to do is help 'the vulnerable'. That means largely those on low incomes. A lot of those are hard working. A lot are not. Then there's the ones that are on benefits. Some have genuine reason. A lot it's a lifestyle choice. But it's all about the lower end. They are not focusing on the middle or top and getting the 'wealth creators' either back on their feet or encouraging them. They don't help hard working people.
As we know the poor can't (won't) pay, the rich won't (they just move their money). The middle get squeezed with PAYE, inheritance tax, CGT etc.
I can't see this country getting on it's feet for a long time. We have 2 years more of blue Labour before we have another 4 years + of red Labour. Maye the real Tories can get back in after that.
AJR. Good keep Dreaming let’s have a big crash then serves you right see if I care.
It makes no difference to me at the end of the day its all for nothing and the tax man, all I ever done was work and help everyone.
Landlords don’t equate to votes so why would they get government assistance?
Nearly one third of all LLs are to sell up this year as the Government and Councils have now managed to kill off BTL.
These LL Properties are mostly going to private buyers not other LLs.
So LLs sell up = Massive reduction in rental properties = Higher Rents = Families looking to Councils to home them in properties they don’t have.
B&Bs and Cheap hotels will be able to name their prices to Councils.
A few years back I had 11 properties now it’s down to 3. Only one was sold on to another LL.
Unaffordable interest rates means unaffordable rents or eviction through repossession or selling up.
Helping landlords helps tenants whose votes they all want.
As a landlord we have no sway whatsoever, we make a fantastic scapegoat, every play needs a bad guy….. we’re it 🤠
Hurt us - hurt our tenants.
Help them by helping us.
The biggest help to landlords with lowest cost implications for the government would be to reclassify BTL as a business, not an investment.
Tax us in the same way as any other self employed person with profits being the bit left over after ALL expenses have been deducted. Treat us as respected housing providers not bumbling armchair investors. Remember the PRS houses around 20% of all households and it tends to be the ones that don't readily fit into other housing tenures. Not needy enough for Social Housing, not earning enough for Build to Rent, not expecting to be in the area long enough to buy. People who simply want to live in a house of their choosing in a timeframe that works for them.
If we were taxed in a traditional way (like we were prior to 2015) rent rises would be far more modest and more landlords could justify remaining in the industry.
The drop in tax revenue would be more than made up for with the lower requirement for funding emergency housing, Discretionary Housing Payments, etc
This should be illegal to classify a business, where we have to be registered, and certified and attend courses, and spend to follow the safety rules, just like an electrician or a plumber or any other tradesman. The only way to fight this is by taking the government to court!! All other trades are crowdfunding to do this!!!!
It cannot be an investment - Investors don’t have rules that they have to follow, and don’t get penalised for investing in their own property like money - It\s their own risk, they borrow money or put in their own money to invest in say shares and stocks etc, and if they lose or win, its theirs. This is a job, self-employment, where there are so many rules and we get penalised and punished for non-compliance. How on earth is this investment??”
It is an interesting point to go before a judge to determine what a business is. Certainly worth setting up crowd funding. It's a shame that the landlord companies do not show leadership in this arena!
It does not appear to be very equal on the surface.
Rental properties are essential. As such stability and low risk are vital. Highly leveraged BTL is risky and unstable. This can have serious consequences for both landlord and tenant. The tax changes were necessary to curtail excessive leveraging. Longstanding professional landlords do not leverage themselves to the hilt and have been substantially unaffected by changes in tax and interest rates.
I have been largely unaffected because I avoid debt, but there are very good landlords who do have debts. My situation does mean that I don't have to raise the rents as interest rates rise.
Echis - mortgages at around 40% LTV is hardly leveraging to the hilt.
Mortgage payments doubling or tripling on top of all the other price increases over the last couple of years is a huge amount of money for people to find. Whether those people happen to be the landlords or the tenants is the only question.
The only clear winner is HMRC as they get the first 40%, 60% or 45% of any rent increase.
Echis, here we go again with your nonsense. So despite all the rate rises please give me a clue as to the following.
1. Scruffy little toe rag owes me 3.5k in rent, trashed the house and left over 70 bags in the place. 1k to clear everything, 4k for a new kitchen, 3.5k for new carpets. Redecoration 2k so when we add all this up 14k in direct expenses while I have been servicing a mortgage. I haven't added lost rent while putting everything right.
2. Another little tramp who decided she wanted another house or apartment off me because she decided she didn't like the one she was in did the following, Smashed wash basin, set fire to the kitchen 4k, smashed two windows including frames 1k, claimed leak from roof (She smashed it from inside outwards) 10k, damp on the walls caused by roof damage, to be fair she tried to ventilate it by smashing the windows..!
Goes to the council and worded to force the issue through court (by Shelter), council tells me to repair everything while she is in it. 15k direct expenses.
So 30k of direct expenses and you come out with utter nonsense about leverage... Stability and low risk??? 11 properties and apart from these two everything else perfect. They had been ok up until someone got in their ear about what they can have and what they can claim from me...
Its High Risk because the bloody councils and activists do not support good landlords, which is approx 98% of them. Get a real job and stop coming on here bleating about bad landlords because thats all your job is, visiting idiots who are renting to illegals.
As leveraged landlords increase their rents this in turn increases the market rent so thr rest of us follow, meaning increased rents for all tenants
Echis R- Landlords unaffected by changes in tax & interest rates…
That has to be the most ignorant cretinous line I’ve read on this forum in years and just shows you have no idea of how the rental property business works in helping tenants and LL’s
Tax changes on borrow costs and higher interest rates have no effect where there is no debt. That is the reality and debt free landlords have seen significant income growth. Interest rates are not high by historical standards. Current problems suggest that many have been sailing too close to the line and lack effective risk management processes.
Bloody idiot is at it again, you show me any business that does not have debt, overdraft, credit line etc and I will show you my backside.
I am lucky 50% of my portfolio is not mortgaged so I can withstand it and living abroad I could easily clear the others, that is not the point though. It is the wanton destruction of a business model that supports the very people that need it. Once you understand that then please feel free to come on here and have a proper discussion.
Not a bright post. Clearly BTL could not possibly have grown to house some 9 million people without borrowing including leveraging. I own 7 properties ( down from 16, as selling up) and 4 of these are owned outright. The remaining 3 are less than 40% LTV
How did I achieve this, by borrowing/ leveraging and the passage of time. Not leveraging and buying cash is a dumb way of utilising finance IMO
Echis
I started my btl journey with a £6000 deposit on a £60k flat and just about broke even renting it out but played the long game waiting for capital appreciation. My patience was rewarded and in a couple of years I remortgaged it for £75k and with the £15k capital appreciation and some more of my own money I bought 2 more on 90% btl mortgages.
Nearly 30 years later I owe around £1 million in btl mortgages and have about £3 million in equity, despite never repaying a penny off any btl mortgages.
I have had over 300 groups of happy tenants over the years but if I had listened to you, which I never would, and not been so highly geared initially, these tenants would have been competing with others for a scarcer resource and probably not have had such nice safe homes.
Luckily for future tenants I have no intention of selling up, but equally have no intention of buying more properties and every intention of maximising my rental income to protect both me and my tenants.
Unfortunately people like you can't see or understand that my interests and those of decent tenants are the same.
Equally the interests of rogue tenants and rogue landlords are the same but unfortunately you and the anti PRS activists are supporting them to the detriment of decent tenants!
Echis, you're a wind up merchant.
Agree that interest rates are not high by historical standards post 2010.
Section 24 tax system is a bit of a devil though.
Another ignorant cretinous line all in one day.
Who would/can sink £250k cash into one property hope to get their rent and pay taxes and maintenance. VERY FEW - result would be less houses for tenants. Astounding thought process
Robert well done we are both at opposite ends of same Business. I started with zero worked 7 days a week saved all I could which was half my wages. When I approached lenders they didn’t want to know me as a single person living in a rented room and it was a bare room with no facilities but allowed to use bathroom if you had 4 old pence for the geezer but careful how you light it or Big Bang.
I had no hope of ever owning my own place, one evening by chance I seen a small plot in Brentford gazette for sale that had been turned for 3 Flats
which seemed ideal for one house right by St Mary’s Church in Ealing Conservation area. I went to see the owner who was a developer and also owned a joinery works in Ladbroke
Grove, where his Office was.
He didn’t beat about the bush named his price and said if you want it 10% today & completion in 28 that was it.
With the Site Secure I approached the Bank for the money Build and the loan was granted but at 13%.
I did build this 4 bed detached house with double garage by my own hand, with only hand tools to incl’ make TRADA roof trusses on site to save costs, no electric on site or available, cordless tools yet to be invented, no family support possible and Dad RIP.
When I go married I carried her over the threshold to her brand new house not queuing up at Benefit Office expecting to be housed so kept.
I still have this house 50 years on which is let, now the THE RENTERS REFORM BILL wants me to justify myself to them why I should have my own house back, if this, if that if I want to sell, non of your Business you morons I would like to see you stand in my shoes you worthless useless people, how dare you.
This is only one episode and would all night on to little HE iPhone.
The other difference between me and our Scottish friend Roberts / Portfolio. I never had an interest only loan or Mortgage so I was always screwed for tax on Repayments long before any S.24 was invented so spare a thought.
It would take a lot more than a text to fill up in on my life story…
Michael
Well done and congratulations on enjoying the fruits of a lot of hard work.
I have always had white collar jobs and usually employed tradesmen and handymen for the hard or skilled work, although I do a lot of cleaning, fixing and painting myself, especially since I retired.
I'm just back from fixing a fridge which kept frosting up so the door didn't close properly. It was the other way round. The tenants had so much in it that stopped the door from closing properly so it frosted up! Taking out some stuff and rearranging the contents allowed the door to shut. I think my 8 years old granddaughter could have figured out the problem, but not four 20 year old undergraduates!
Robert, education is not what it once was.
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