Higher mortgage payments haven’t finished filtering through to rents

By admin Dec21,2023

Almost two thirds of private landlords expect to see their mortgage payments increase over the next 12 months – suggesting that further rent increases are on the horizon.

Over a quarter of landlords said they plan to remortgage over the next 12 months, with 60% expecting their mortgage repayments to go up.

Landlord investors across the UK are now paying £15 billion in mortgage interest on an annual basis, up 40% over the course of the last year.

Ben Beadle, chief executive of the National Residential Landlords Association, said: “Higher interest rates put continued pressure on renters, as landlords are simply unable to afford growing mortgage costs.

“Ministers need to accept that tax hikes on the sector have also played a major role in the affordability challenges we now see across the rental market.

“It’s time to reverse course and develop pro-growth tax measures. Without them it is renters who will continue to struggle as demand outstrips supply and rents go up.”

The buy-to-let market is especially exposed to the impact of higher interest rates, given 82% of mortgages in the sector are interest-only according to the Bank of England.

This is compared to just 11% for owner-occupier mortgages. As a result, the Bank warns that, in the near term, “higher rents are likely, given rising mortgage costs and strong demand.”

Despite higher rents, Savills finds that landlords’ profits are at their lowest level since 2007. Rising rents largely reflect the need for landlords to cover the increased costs which they continue to face.
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