New figures from lenders trade body UK Finance show a massive fall in buy to let loans for those aged 55 or over.
In the last three months of 2023 there were just 7,980 buy to let loans or remortgages from the 55-plus investors, down 52.86 per cent.
“New buy to let mortgages have fallen off a cliff among older landlords, with the number of these loans halving in a year. Given that older people make up more than a fifth of all buy to let loans, this has a wider effect on the broader market” warns Sarah Coles of business consultancy Hargreaves Lansdown.
“As more older people decide that being a private landlord isn’t as rewarding or as tax-efficient as they had hoped, it means they’re selling up, which puts more pressure on rising rents again” she adds.
The buy to let mortgage slump is just one aspect of how older borrowers have sat on their hands recently.
There were only 29,060 new mortgages taken out by older borrowers over 55 in the last three months of 2023 - down 37.1 per cent in a year.
Some 13,160 of these borrowers were in work, and 1,000 retired. The number of retired people with mortgages is down 30.56 per cent in a year.
Around half of new mortgages for the over 55s were for house purchases or remortgages (14,625) – down 20.95 per cent in a year.
And 6,710 of them were new lifetime mortgages (equity release) – down 40.14 per cent.
There were 255 retirement interest-only mortgages – down 43.3 per cent in a year - and 7,980 were buy-to-let loans or remortgages, down 52.86 per cent.
Coles continues: “Older borrowers are ditching mortgages by the bucket-load, thanks to higher interest rates.
“Hundreds of people are focusing intently on repaying the debt before they put their feet up, thousands are delaying equity release, and the number of older landlords snapping up new buy to let loans has more than halved.
“Higher house prices and more complicated personal lives have been driving more people to pay their mortgage later in life. It means that, all things being equal, we'd expect the numbers of retirees still paying the mortgage to be rising.
“Clearly, sky high mortgage rates have turned the tables, and persuaded people to double down on their efforts to repay their debts before retirement – to avoid entering their golden years weighed down by huge monthly repayments. The number of retired people with new mortgages is down almost a third in a year.
“If people are repaying their mortgage alongside making generous pension contributions, there isn’t anything wrong with this. The concern is that some will have compromised on pensions, stocks and shares ISAs and savings in order to maximise mortgage repayments.”
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NEVER 🤣🤣 and why would that be I wonder 🤔🤔, could it be because we have had enough and are selling up 💰💵💰💵
Sarah. There’s a flaws in your research.
Forgot to mention TRRB removing Section 21 the prime mover of older landlords getting out and definitively not expanding.
So the over 55’s hold one fifth of buy 2 let Mortgage’s, you didn’t mention that over 55’s are more likely to have their Mortgage’s paid off probably own three fifths of the Market having been landlords for 20 / 30 years and are now filling the Auction Rooms getting out having a far bigger impact on the Market than interest rate rises.
100% right Michael!
Section 21, Section 24 and the endless petty regulations. Are these people completely daft and it's the entire sector not just the over 55s that can get better returns elsewhere. Chickens are coming home to roost
I wanted to hang on to the houses, but I am starting to arrive at the conclusion that it is no longer prudent to do so with the removal of Section 21.
At the moment, too, we face huge legal uncertainty regarding letting, primarily caused by Labour's undertaking to remove Section 21 on their first day in office.
Matt Pennycrook also wants to introduce a hardship test when a landlord is selling. Therefore you will never get your proeprty back as the tenant will have nowhere to go. Your needs as the owner are not important!
I'm selling up unless section 24 is brought back asap.
Paying 40% tax on rent results in paying tax on money we do not have.
After paying the mortgage there is not enough money let to pay the Tax.
This results in less rental properties and higher rents. Government economic madness !!!
This is not the only thing affecting our Business.
The Big Boys with their multi storey high rise flimsy Developments taking over our Business with favourable treatment, (back to rubbish cladding again).
Then as I blogged before without getting any reaction on this platform, the new Permitted Development Right’s. Planning Permission Guaranteed just tick a few boxes for empty Commercial Property and Shops etc to Convert to Residential there are thousands of those in every Town. Just imagine the impact this will have on the Market probably collapse the letting Business and as a consequence the Housing Market, good luck to anyone that paid big money and have a big Mortgage around their neck ending up in negative equity.
I knew there was master plan & destroying existing Private landlords is an integral part of it.
Just turned 51 and to be honest I am seriously thinking of wrapping up at 55 unless there is some light at the end of the tunnel...
This is also an advert on behalf of HL to get people to stick more money in their ETF's
Vanguard and SCM seem much better value than HL in my opinion.
Tried Vanguard Robert, total waste of time and money
Wish I were 51 again Peter, I was buying strong then and enjoying it
I have Vanguard. I track the S&P 500. That's a good investment. Warren Buffet says so. The fees for Vanguard are one of if not the lowest. They are fine for tracker products.
Yes Nick Vanguard fees are low but there's a reason for that they were worse than useless for me
My product is designed to track the S&P500. So there's no real investment skill in that. So to me the fees is what matter.
You can invest directly in the S&P500 without going through an agent, saving fees costs.
How can you do that John? With who?
To invest directly in the S&P500 you need a trading platform such as capital[dot]com They do have help information on their website, see 'learning to trade' section. This involves some 'work' it's not set and forget. If anyone is interested in the type of investing I do, have a look at my Youtube channel Hotel Tango Tango Papa Sierra[colon-forwardslash-forwardslash]youtu.be/vfswmSNH4dM
John,
This is coming up as crypto trading? By AutotradingAi?
Yes Nick, That's my channel. It's not really about crypto investing, it's more about trading on the price movement. There are no guarantees so I would not invest a large amount. You should use the demo account for a while to see how it works before using real money. 2022 I lost a small amount, 2023 my account grew by 90%. I have worked out a strategy that seems to be working. Watch my videos to see how I do it.
With BTL interest rates at 5.49% without a huge fee or a bit lower with a massive fee it's virtually impossible to find anything that stacks. By the time SDLT, conveyancing and light refurb costs have been added in it really doesn't stack. Every day properties on Rightmove are reduced, reduced, reduced. So right now is not the time to buy anything mainstream. Maybe at auction would stack?
There's one house I would buy if it came on the market even though it probably wouldn't quite break even. It fits my portfolio and I want it. Other than that I'm not buying.
I'm also not selling.
Last year I reduced overall mortgage debt significantly and shifted what I could from the HMOs onto the standard residential properties to get the lowest possible rates.
Now with decent interest rates on ISAs and savings accounts it makes sense to save money to pay down the next batch of mortgages when they come off their current fixes in 2027. That's money that would normally have been used as deposits to buy more BTLs.
It's also money that I was planning to use to buy more not now though, with Kneeler and his lot on the way
In my opinion, retaining around 25% mortgage debt for ever makes sense as it's better to give money to younger generations than to fully pay off all mortgage debt, even with Section 24.
Think of using the avoided IHT as a contribution to the interest paid after tax.
I am with you on that Robert, although I am thinking of wrapping up at 55 my other train of thought is refinance and take out the capital and move it offshore. Which way to jump is certainly a conundrum at the moment.
Of course there is a dramatic slump. Why would anyone want to invest?! Older landlords are not going to buy into an uncertain future where they are vilified, used as a political football, no control over their properties and no tax benefits. I have sold three (with huge CGT hit) with more to follow. Being a landlord is a thankless task. I am convinced it can only get worse. Without Section 21 it is no longer a viable business for landlords wanting to retire. I am worried Labour will tighten it even further by not even allowing a landlord vacant possession when he/she want to sell.
It's not rocket science is it.
The older generation will naturally sell up and without any incentive to be a new landlord the stock levels drop and rents increase.
Everything ticked along just fine until the Government stuck their noses in.
I for one am selling up. Sorry Tenants, blame the people you voted for.
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