NRLA calls for mortgage relief as interest rates soar

NRLA calls for mortgage relief as interest rates soar

0:02 AM, 26th June 2023, About 10 months ago 14

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The National Residential Landlords Association (NRLA) is demanding immediate action from the government to alleviate the financial strain on renters and landlords after 13 consecutive interest rate hikes.

The organisation says the full restoration of mortgage interest relief and the unlocking of housing benefit rates will ease the burden.

Its urgent appeal comes as the Bank of England raised interest rates by 0.5% to 5% to combat the UK’s high inflation.

Although it is slightly down from previous months, the current inflation rate of 8.7% remains significantly above the Bank’s 2% target.

The NRLA says the latest increase will add financial pressure on landlords with buy-to-let mortgages.

‘Hard hit by rising mortgage costs’

Ben Beadle, the NRLA’s chief executive, said: “85% of buy-to-let mortgages are interest only, making them especially hard hit by rising mortgage costs.

“Some landlords have seen mortgage payments rise by almost 240% since December 2021.”

He added: “Analysis for the NRLA has found that 735,000 rental properties could be lost across the UK if interest rates peaked at 5%, further exacerbating the supply crisis renters are facing.

“It makes no sense to have a tax system that discourages investment in the homes renters need, and benefit payments that fail to provide vulnerable tenants with the assurance that they can afford their rents.

“The Chancellor needs to take urgent action to support the rental market by reintroducing mortgage interest relief in full and unfreezing housing benefit rates.”

Thousands of landlords may be forced to quit the PRS

Property Master also says its research highlights that thousands of landlords may be forced to quit the PRS because of rising mortgage rates.

The online mortgage broker says that 40% of landlords have either recently sold, or are considering selling, one or more properties.

It says that if this came to fruition, the impact would be ‘very significant on tenants’ and the overall housing market.

The firm also says that the government should not ignore landlords who provide homes for five million households as financial pressure grows.

Borrow on interest-only mortgages

The chief executive of BTL mortgage broker Property Master, Angus Stewart, said that landlords tend to borrow on interest-only mortgages.

And with their fixed rate deals expiring, they are facing a ‘very substantial increase in costs’.

He says that with most fixed rates now over 6%, the interest costs can have tripled since their last mortgage was taken.

Mr Stewart said: “The continued increase in interest rates is causing a perfect storm.

“George Osborne’s changes to the rules on interest rate relief in 2015 had minimal impact when interest rates were low.

“However, they are now seriously impacting the profitability of a landlord’s business.”

What might happen to BTL landlords

The NRLA’s view of what might happen to BTL landlords has been echoed by Chestertons who say that landlords struggling to make a profit will quit the sector.

The firm’s head of sales, Matt Thompson, said: “We expect the rate rise to have an impact on overleveraged buy to let investors whose increased mortgage payments could lead to their investment making limited profit or even a loss.

“This could result in some landlords deciding to offload their assets.

“Demand for properties in London continues to stay strong as the capital remains a hotspot for a variety of buyer demographics, including international buyers.”

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10:08 AM, 26th June 2023, About 10 months ago

Treat all landlords equally, and abolish S24 as a starter.

Andrew Dove

10:49 AM, 26th June 2023, About 10 months ago

Matt Thompson,
It is not just overleveraged landlords that will sell property.
Please consider this example.
Portfolio landlord with 10 properties and 6 mortgages at 60% debt, each property worth £100k. This equates to 36% portfolio debt.
Unless, the landlord operates with a very favourable mix of high yield, low costs and low marginal tax rate, it would probably make sense to sell 2 or more of the mortgaged property to avoid cash outflows.
If in any doubt, try entering numbers in my web based calculator...

Seething Landlord

11:05 AM, 26th June 2023, About 10 months ago

Well done George Osborne, your policy has succeeded beyond your wildest dreams. The playing field has been levelled, which is what you wanted, and property has become equally unaffordable for first time buyers and buy to let investors, maybe not exactly what you wanted but never mind.

Renters are unable to buy and can't find anywhere to rent at affordable prices, but who cares, at least you have got rid of those pesky leveraged landlords.


17:17 PM, 26th June 2023, About 10 months ago

Reply to the comment left by Seething Landlord at 26/06/2023 - 11:05
At the beginning of the year I was adamant I would not to sell and was going ride out the RRB and 2024 Labour's LL tax bomb shells and OTT regs coming our way BUT I have no choice now as mortgage rates will be too high to remortage so will be forced to pay the debt down to make the numbers work. IT WAS S24 that has tipped me over the edge to sell even with higher rents factored in because in 2017-2021 interest rate was so low S24 impact was minimal in overall property financials. Therefore I will be one of the new wave of (S24) sellers along with much trailed other wave- the retiree LLs who are ' cashing in.' Really bad news for tenants for the future.

Voice of a landlord

19:05 PM, 26th June 2023, About 10 months ago

"...After the horse has bolted "comes to mind when Ben Beadle of NLRA is now asking for mortgage relief.

There was a recent petition in March 2022 to abolish s24 ,that had over 40,000 signatures. However NLRA refused to support it then and now the patient is dead they are screaming for an ambulance!!!


21:44 PM, 26th June 2023, About 10 months ago

Reply to the comment left by Voice of a landlord at 26/06/2023 - 19:05
Yes the narrative has changed as the media are pushing for HOME OWNERS with mortgages to get relief so now not a cat in hells chance of LLs jumping the que for that. Only 1m LLs mortgaged vs. 4 m Houseowners mortgaged so no vote gain from LLs!

Mervin SX

7:22 AM, 1st July 2023, About 10 months ago

There are some very foolish people in the government and now in the NRLA too!

How does helping people with their mortgage payments going to help bring inflation down? The whole point of increasing BOE rate is to curb expenditure or to reduce the disposable income (in the short term).

NRLA should be campaigning for abolishment of Section 24 (but their lobbying power is useless - so, it's not going to happen.

These so called 'landlord associations' have done nothing for landlords!


8:26 AM, 1st July 2023, About 10 months ago

Reply to the comment left by Mervin SX at 01/07/2023 - 07:22
I am a member of NRLA (only use it for tenancy agreements and advice line), but I increasingly think they are there now as money making organisations , flogging courses and conferences.


8:32 AM, 1st July 2023, About 10 months ago

Reply to the comment left by GlanACC at 01/07/2023 - 08:26
I am a member too. I am involved in their Landlord panel and have a meeting with Ben in September. I wont be mince my words and will tell him straight as I can read the general sentiment from P118 forums from LLs. Being chummy chummy with Gove is not going to get us anywhere. We need to chummy chummy with Hunt!


8:35 AM, 1st July 2023, About 10 months ago

Reply to the comment left by Crouchender at 01/07/2023 - 08:32Thanks, you might tell him to campaign for a lower EPC rating of D as well because C is just not achievable for properties with all electric heating.

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