Buy to let landlords adapt to rising costs

Buy to let landlords adapt to rising costs

8:26 AM, 9th May 2024, About 2 weeks ago 3

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Many buy to let landlords in the UK have adjusted their finances in the past 18 months to deal with rising costs, according to a new report.

The research from Foundation Home Loans found that landlords are taking various steps to deal with growing overheads, including renegotiating mortgages, increasing rents and even selling properties.

The report, which surveyed more than 770 landlords, reveals that 30% of landlords have renegotiated their existing mortgages, while 29% have raised rents.

Also, 25% of landlords say they put on hold plans to buy additional properties.

Landlords are also looking to save on management fees, with 17% taking on more property management tasks themselves and 8% switching from letting agents to self-management.

‘Using all options at their disposal’

Foundation’s director of sales, Grant Hendry, said: “Understandably, landlords have been using all options at their disposal when it comes to mitigating the increase in mortgage costs they have seen as a result of higher rates, and there is clearly a ‘needs must’ approach to dealing with this issue.

“As well as remortgaging to a new lender for a better rate or renegotiating with their existing lender (taking a product transfer), a great many are funding increases via savings or selling properties, so they don’t have to increase rents.”

He added: “While we have seen rates come down off their 2023 highs, there will still be large numbers of landlords who are coming to the end of their current deals and are looking for solutions in order to keep down any mortgage cost increases.”

Positive signs for the private rented sector

Despite the financial challenges, the Foundation report highlights positive signs for the private rented sector.

It says that more than 40% of landlords are planning to remortgage or transfer their mortgages in the next year.

And 68% said they had used a mortgage adviser for their most recent buy to let mortgage, demonstrating the value placed on expert guidance.

Future investment plans, 48% landlords will use BTL mortgages, while 38% plan to buy outright and a similar number will release equity.

Mr Hendry said: “It clearly remains challenging times for landlords, but they are maintaining the profitability of their portfolios, yields continue to rise, plus there remains strong tenant demand against a backdrop of relatively low supply and higher population numbers seeking housing.”

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Reluctant Landlord

12:08 PM, 9th May 2024, About 2 weeks ago

There may be low supply and high demand, but yields are decreasing because of 'other' rising costs that are never taken into account.

There will always be a natural cap on what a LL can charge in rent. If its deemed excessive the property remains empty.

NOTHING can account for the loss if tenant who stops paying the rent or trashes the house, or the time and cost to gain possession, yet none of this is factored in to the equation.

Its getting to the point for many, that 'profitability of a portfolio' is literally minimal. There is no huge profits at all...and that is indicative in the number of LL's who have sold, selling or have no plans to buy any more.


8:42 AM, 11th May 2024, About 2 weeks ago

I honestly think that there is still a good return to be had on your investment. When you factor in both rental income and equity growth or market value increases. Yes the government in all guises, is being completely anal and unrealistic towards landlords. But I view this as a challenge to my abilities. I will be staying in the PRS as I refuse to be bettered by the likes of Sunak & Starmer.
Anyone who would like reassurance, please contact me here on property118 or via SAS Letting Agents Ltd. Have a great weekend all.

Monty Bodkin

11:08 AM, 11th May 2024, About 2 weeks ago

Reply to the comment left by JC at 11/05/2024 - 08:42
I'd be very worried too if I were a letting agent.

But your letting agent trade bodies carry a lot of responsibility for rolling over to the Renters Reform Bill and the sh*itshow that will inevitably ensue.

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