Some 40% of residential landlords with a mortgage - fixed, tracker or discount - are due to renew their mortgage rate in the next seven months to one year.
That’s according to new research from The Mortgage Lender.
While two fifths of landlords have their mortgage coming up for renewal this year, a further 41% are due to renew their mortgage in the following three years.
According to the research, the majority of landlords with a mortgage are currently on a five year fixed mortgage (42%), while 21% are on a two year fixed deals. Some 15% are on Standard Variable Rate mortgages, and eight per cent are on a tracker.
TML claims that while mortgage rates have dropped from their peak, those needing to remortgage in the next year will very likely still have to pay more on their mortgage than they currently are or would have had to if they had taken out the same mortgage a few years ago.
Of those landlords needing to renew their mortgage rate, they believe their monthly payments will increase by £615 on average.
To deal with higher monthly costs, 30% of landlords have said they plan to increase the rent of the property, 23% have already budgeted for an increase, while 14% said they would sell the property. A further 14% said they plan to convert the property into an HMO in order to secure better returns, and 13% are considering converting to a holiday let.
A TML spokesperson says: “With many due to remortgage this year, it’s important landlords speak to a broker to find the most suitable mortgage for them in order to maintain their property portfolios, particularly as costs of living challenges continue. Brokers can offer invaluable support and guidance to help provide a holistic view of what deals are most suitable for clients before they rush into any decisions.”
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Surely This can't be right? I thought most BTL were 2 year fixes, so most have already come to an end and landlords already paying 100% more. I know some smarter people went for 5 year fixes but surely not 80%?
I managed to do 5 year fixes with Godiva until mid 2027. Still paying under 2% for at least 3 more years. I actually just missed out on 1.69% deals on some properties and paid an early repayment penalty on one to get the 1.99% deal.
Having had my fingers burned in the past with 15% mortgages and 30% overdrafts, I became ultra sensitive to potential future trends and have been quite good (or lucky) at making the right decisions when to go variable or take a short or long term fix.
If I needed to do anything right now, I would go variable for a short period, although the track record of past Labour Governments would worry me a bit.
All of mine were 5 year fixes except one tracker.
Five ended last year and have gone onto new 5 year fixes. The fees and rates for 2 year products were insane. I managed to shuffle some of the borrowing onto non HMO properties, which helped a bit, but it was still massive increases.
My next batch of low rate fixes end in 2027.
Section 24 is making the whole situation so much worse. To cover a £500 increase in the interest payment rent needs to be increased by £667 just to cover the extra interest and tax. However, increasing the rent puts me into the 60% tax band so rent needs to increase by £1000 to cover the extra interest and tax. Roughly 50% of PRS tenants are housed by portfolio landlords so this is affecting millions of people. Obviously we can't actually increase rent that much in one go so it is baking in annual increases for the foreseeable.
Landlords certainly aren't benefitting from the rent increases. We mainly can't increase rent enough to cover the extra cost and are just acting as unpaid tax collectors.
Yes Jo, you are an unpaid tax cash cow, collector. All contributions to immigration and the 9 million not in education employment or training. NEET!
Those who had two year rares must be suffering but Kahn wants rent controls.. I have longer fixes but will have to put rents up a by large amount in 2026 in paper match my 2020 income (with inflation I will still be worse off). Time to quit the PRS.. And Kahn knows we will.. Its all abt popularlist appeal to young renters who don't understand basic economics and that it will become harder and harder for them to find anywhere to rent.
I always fix my btl's for 5 years for peace of mind. I have fixed all btl's except one in end of 2022 to end in 2027, most of them below 3%. It was a good achievement as most are corporate borrowings. One small mortgage fixed at 3.1% as I found it cheaper not to pay the arrangement fees, being below £100k.
One of my mortgages is due early next year, currently paying 1.79%, hoping the base rates will come down by 0.5% to 1% this year and get a rate up to 3.5% fixed for 5 years. Not good, I know. But it is for 4 sharers, sometimes working people, mostly students as near a popular university. Interest only mortgage, so no problem. But I would like to take advantage in the future of paying at least 5% capital to reduce the mortgage.
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