Experts warn that landlords are facing a financial ‘timebomb’

Experts warn that landlords are facing a financial ‘timebomb’

0:01 AM, 20th December 2022, About 9 months ago 5

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Landlords coming to the end of a fixed-rate two-year mortgage deal are facing a ‘timebomb’ should their investments lose money, and they need to sell.

An analysis by Capital Economics for the Daily Telegraph reveals that around 365,000 properties are at risk of making a loss next year and this could trigger a tsunami of property ‘fire sales’ which would then drive down property prices.

The consultancy warns that by the end of 2023, 8% of the 4.5 million rented homes in England could be loss-making – that’s one in 13 properties.

And another 182,500 BTL properties could be losing money in 2024 if BTL mortgage rates do not fall.

Landlords coming to the end of a fixed rate mortgage

The analysis highlights that for landlords who renew at the end of a fixed rate mortgage could be facing a steep increase in interest rates.

The issue comes with the typical borrowing costs for a landlord more than doubling for those who are renewing when their two-year fixed-rate BTL mortgage deal ends with rates rising to 6.3% from 2.89%.

Capital Economics’ Andrew Wishart said: “Even those who will still make a positive cash return may consider selling up.”

Monthly repayments will be rocketing

For a landlord who has a £150,000 loan, their monthly repayments will be rocketing to £788, from £361 per month. That’s an increase of £427.

The estate agency Hamptons says this rise in mortgage costs will cut into the profits made by the average landlord which are currently £2,526 a year, or £210 a month.

It’s this financial crunch that is raising worries for the housing market because a flood of cheap properties being offered for sale would dramatically affect wider house prices.

The chairman of the housing select committee, Labour MP Clive Betts, told the Telegraph: “Even if a portion of these properties are listed for sale, it will be a really major shock to the whole housing system.”

Landlords are looking to sell up

There are already signs that landlords are looking to sell up with the cash buying firm We Buy Property telling the newspaper that they have seen a 70% increase in the number of landlords looking to sell their properties when compared with last year.

The Telegraph highlights that the analysis will not be welcomed by many landlords who have been hit by several unfavourable tax changes by the government in recent years and who may face tighter minimum energy performance certificate requirements by 2025.

This will see many landlords having to invest hefty amounts to meet a minimum EPC requirement of C with experts predicting that this financial outlay may also lead to lots of landlords leaving the sector.

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9:47 AM, 20th December 2022, About 9 months ago

So now there has never been a better time to challenge this by signing this petition.

How many landlords read Property 118? This should easily get to 100,000!

Richard Holder

10:15 AM, 20th December 2022, About 9 months ago

this petition needs to be advertised far and wide with the likes of the NRLA

Voice of a landlord

11:12 AM, 20th December 2022, About 9 months ago

Well done !

I was going to start a petition myself.

Next step is to get as many estate agents to promote it to their landlords. Many I have spoken to are keen to help.

If a member of the NRLA also send to them as well as other landlord associations.

It would be good to have a narrative that explains the cause of the petition somewhere?


16:38 PM, 20th December 2022, About 9 months ago

Since I reposted the petition link above this morning, only 500 or so people have signed it!

I appreciate not everyone would have read the post, but why are Property 118 not sending this out daily to all their subscribers? Such an easy way to help.
I would have thought this would get to 100,000 easily - in a matter of days!

Neil Patterson

17:12 PM, 20th December 2022, About 9 months ago

Reply to the comment left by Lordship at 20/12/2022 - 16:38
We have helped finance, fought and lost the Axe The Tenant Tax Judicial review.

Also numerous petitions, but happy to have another go. >>

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