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Remortgaging landlords upping their rental prices

Journalist: Jake Carter, Mortgage Introducer

ended 02. March 2023

According to Landbay, 68% of landlords intend to increase rental prices when they come to remortgage.

What impact will this have on the rental market?

Could some landlords choose to exit the market if yields no longer prove profitable enough? If this happens, how will this shake up the market?

What support could be introduced to assist those that are struggling?

4 responses from the Newspage community

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Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
Most of the landlords we are currently dealing with are raising rents as a result of higher financing costs. Accidental landlords, or those who converted an old residential property to a buy-to-let property, are the ones who say they are considering exiting the market more than portfolio landlords and who can blame them. I'm seeing an increase in the number of cases where the rent matches the monthly mortgage payment, particularly in the South.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Rent is going up across every corner of the UK. You would expect this at times of high inflation, but continually rising interest rates are also resulting in higher rents. The Bank of England could take the pressure off by maintaining rates, but we wouldn't expect those sadists to do that, so another 0.5% rate hike is on the cards. By the time the central bank starts cutting rates, I expect a massive increase in homelessness, on top of the 25% increase we have already seen this week.
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Keith Hood
Mortgage and Protection advisor at Warners Financial Services
Most landlords are on fixed rate, interest only mortgages which means that when their existing deals end and they see their rates have increased the whole of their monthly payments is impacted. At the moment its not uncommon to see payments increasing by as much as 100%, so inevitably most landlords will increase the rent. Bad news for both landlords and tenants. Sadly some landlords are leaving the sector as its just no longer sustainable, causing the current shortage of rental property to increase further. This wont change in the near future unless either the cost of property falls significantly or interest rates continue to fall to a level that makes the equation work again.
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Aman Aneja
Mortgage Expert at AA Mortgage Services
The impact increases will have on the rental market are most tenants will have to pay these higher rents as they will struggle to find cheaper alternatives as there is a shortage of stock in the rental market. The majority of landlords have no choice but to increase, especially if the property is mortgaged where rates have risen substantially in the past 12 months. Landlords will feel the government have an agenda against them, especially with the additional property stamp duty surcharge and tax changes where they can no longer claim mortgage interest relief if the property is not held in a limited company.

Some landlords are exiting the market when tenancies are ending which may provide opportunities to owner-occupiers who were previously in the market competing with these landlords.