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Landlords selling up

Journalist: Melissa Lawford, The Telegraph

ended 14. June 2023

Are you seeing landlords struggling with the burden of higher mortgage rates when they come to the end of their fixed rate deals? Are many seeing their properties become loss-making/selling up as a result? What does this mean for the housing market as a whole (eg in city centres)?

 

 

8 responses from the Newspage community

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Editor
Darryl Dhoffer
Founder at The Mortgage Geezer
With higher mortgage rates comes higher hurdles to jump. For the long standing portfolio landlords out there, there are some Olympic Hurdlers out there for sure - they have been here before on higher interest rates, and the wise ones are well placed to capitalise on properties coming to the market, from sadly accidental or non portfolio landlords, who have 1-2 properties that are now not making the rental yield or capital growth they previously experienced. For those landlords who don't need finance for their purchases, are right at the top of the tree for negotiating their next buy, especially when rents continue to rise and demand is outstripping supply for renters, the next 6-12 months will see more rental properties come to market. However, they won’t be on the market for long for the seasoned landlord.
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Rohit Kohli
Director at The Mortgage Stop
It's a mixed bag - for landlords who have multiple properties many appear to have a cushion in their rent vs. mortgage payment. Many of these landlords are not adding to their portfolios. For landlords with one or two properties, it's a very different story - the jump in rates they are seeing are making their rentals loss-making so rents are going up but nowhere near enough to cover the increase they are seeing in mortgages. We'll see rents increase further in the coming weeks or months no doubt. The problem with these landlords wanting to sell is unless they are an abundance of cash buyers there are not many people willing to buy a new buy-to-let at the moment so we're either going to see a drop in prices or an increase in landlords hading back the keys or worse - both - we are on the cusp of a vicious cycle. One client yesterday was looking at an £800 a month increase in their mortgage when their current rate ends.
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Justin Moy
Managing Director at EHF Mortgages
For landlords with only 1 or 2 properties, there has definitely been a popular conversation, with many looking at the opportunity to sell and exit the landlord market. Many became a landlord simply to break a house move chain, rather than to make money, but once that arrangement starts to make a loss, they are the first to react. We would recommend that they check on any potential CGT costs, as many would have made some decent capital appreciation over those years - could be they cannot afford to sell or to be a landlord. This increase in property volumes may drive prices down in certain areas, which would be good for other landlords who are buying or those first-time buyers.
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Sophie Pollard
Director at MyHaus Brighton
It has been a turbulent time for landlords these past few months with many concerned about the impact of rising interest rates and the Rental Reform Bill coming in. For the experienced landlord, I think we will see a minimal change in choosing to sell as they are in for the long game. It's those accidental landlords and smaller landlords relying on one or two properties that are feeling the pinch and choosing to sell - we are seeing a revaluation of portfolios and a need for the highest rents achievable to meet the new rates. Not all landlords are the same and there could be an opportunity for those in a fortunate position to grow their portfolio even further...
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Amit Patel
Adviser at Trinity Finance
Smaller landlords now face the stark reality of absorbing higher mortgage rates and lender fees and some will have no choice but to ultimately exit the market altogether as the properties become unprofitable.

Some landlords bought an investment property to supplement their earned income and to provide an income for their retirement.



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Michael Webb
Managing Director at Mortgage Republic
Our landlord clients are most definitely considering selling their properties instead of remortgaging at a higher interest rate. The main reason behind this is they feel prices are still holding up, however, their monthly cashflow is under attack from multiple angles. These include increased interest rates, as well as tax burden increases. Added to this those who are in the HMO market where utilities are included are under increased pressure here.

Overall, the work and risk involved with buy to let is looking less attractive, and therefore landlords are looking at alternative investments that are less risky. Especially now interest rates are rising, and they can have completely hands off, capital assured investments at increasing rates of return.
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Rob Gill
Managing Director at Altura Mortgage Finance
We are yet to see landlords start selling up en mass. With property prices up around 20% in the pandemic years, and rents rising nearly as fast since, many landlords are still in decent shape financially. Good landlords regard their rental properties as a business, many are both willing and able to ride out the current downward leg of the inevitable cycles that affect any business.
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Cliff L'Aimable
Managing Director at Building Control Surveyors
A number of our established clients in the south-east have reported to us that as buy-to-let landlords they are seriously rethinking their plans. Expressing to us that their current financial models have become untenable due to a gruelling combination of rising mortgage rates especially after the end of their fixed rate periods, oppressive taxes, and even more stringent regulations.
The threat of a new labour government potentially raising higher taxes on their buy-to-let properties has further fuelled their distress.

The current oppressive buy-to-let rental outlook being faced by landlords will only make worse the current shortfalls in the home rental sub-market category, as many portfolio landlords are poised to quit the affordable rental sector.