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Landlords remortgaging

Journalist: Melissa Lawford, The Telegraph

ended 22. December 2023

Do you have landlords who are refinancing in 2024? What will their mortgage bills rise from and to? Do you have buy-to-let landlords who will see their mortgage bills rise for the second time (eg, those who remortgaged with two-year fixes in 2022 and will now have to refinance at an even higher rate next year)? What does all of this mean for buy-to-let profit margins? Are some landlords selling up as a result?

5 responses from the Newspage community

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Editor
Michelle Lawson
Director at Lawson Financial
With interest rates coming down and more certainty of a Bank Base rate cut early in 2024, this is good news for landlords as it would appear this part of the 'pain' has peaked. Profit margins have dropped massively for landlords due to the tax and regulatory burdens and whilst some are still selling and will continue to do so, there are those who will hold their nerve. As with everything, there are unintended consequences and this is the impact on rents for the tenants as these will rise. Most landlords do not make a significant profit on rental properties and the sector stock is suffering as a result of this.
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Darryl Dhoffer
Founder at The Mortgage Geezer
The 2024 Landlord remortgage landscape, will certainly be different to 2023, hopefully with competitive pricing from lenders. There will still be significantly higher mortgage repayments to pay for those coming off lower interest rates - predicting what these figures will be is difficult but there could be increases of between 1% to 3% which on a £150,000 mortgage could translate to a monthly rise of £150 to £450, so margins will continue to be squeezed, but certainly not as much as this year.
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Jack Tutton
Director at SJ Mortgages
Landlords have struggled with their mortgages this year and will continue to all the time rates remain as they are, the high-stress rates are making some of what were once successful profit-making portfolios break even at best. This has led to many landlords that we've spoken to either paying off significant sums to reduce the borrowing or selling up completely. The lack of profit margins has put existing landlords under real pressure with the only options for many being to increase the rent their tenants pay or sell up, this has been a driver for the increased rent given the lack of supply in new properties available in the market. There is hope moving into 2024, interest rates are falling and hopefully, these reductions will be passed on to the buy-to-let market. This will help reduce the stress rates that landlords need to meet and improve profit margins, this should make owning a buy-to-let property moving forward more attractive than what they have been in 2023.
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Elliott Culley
Director at Switch Mortgage Finance
Many landlords are selling up unprofitable properties as a result of the mortgage rate rises. With the recent tax changes it has become almost impossible to make any profit from buy to let properties. Landlords are now mainly looking for properties with higher rental yields such as HMOs or looking to reduce the level of borrowing they have against the property.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
The NRLA recently published a report showing 60% of landlords expect to see their mortgage payments to increase in 2024.

Given that 82% of mortgages in our sector are interest-only, compared to just 11% for owner-occupier mortgages, the BoE itself has warned that, in the near term, higher rents are likely, given rising mortgage costs and strong demand due to many landlords selling up over the past couple of years.

Despite the fact that rents have risen to record levels, it is well known in the industry that landlords’ profits are at their lowest level since 2007, indicating that these rent increases are not a sign of profiteering. Rising rents largely reflect the need for landlords to cover the increased costs.

Michael Gove and Jeremy Hunt need to accept that tax hikes on the sector have played a major role in the challenges we now see across the rental market. It’s time to reverse course and develop pro-growth tax measures to attract private investments across Britain.