Tag Archives: BTL mortgage

Increasing BTL mortgage costs will ‘put the market under pressure’ Buy to Let News, Landlord News, Latest Articles, Property Investment News

The recent rise in the Bank of England base rate will put the BTL market under pressure, one broker says.

Property Master says that with BTL mortgage costs set to increase further after the base rate hike, landlords need to look at the products available – and whether they should fix now before rates increase.

Angus Stewart, the chief executive of Property Master, an online broker for buy-to-let mortgages, said: “Landlords should check when their current fixed terms are expiring or see whether they wish to have certainty on their monthly repayments by looking at a new fixed rate now as base rate increases yet again.

“The Bank of England’s increase in the base rate of 0.75% from 2.25% to 3% follows similar increases in rates from the Fed Reserve in the US and the European Central Bank.

“These increases are all with the goal of curbing the rapid increase in inflation which has now topped 10% against the Bank of England’s target rate of 2%.”

‘Many fixed rates are already pricing in this level of interest rate’

He added: “Landlords should also expect any mortgage on a tracker or variable rate to reflect this rate increase, and while many fixed rates are already pricing in this level of interest rate, we are seeing continued fluctuations in lenders’ rates.

“The good news is that there is now greater stability in the financial markets and products are not being withdrawn and repriced as they were immediately after September’s disastrous mini-Budget.”

Mr Stewart said he expects the base rate to continue increasing over the next year to between 4% and 5%.

He added: “So, this is a good time for landlords to look at their current mortgage rate and see if they can lock in some certainty of monthly repayment.

“Apart from increasing interest rates, lenders are also increasing stress rates they use to assess affordability.

“This can have a significant impact on the amount landlords can borrow when they purchase or remortgage.”

Lender’s stress rates have been built into their search offering

He said that a lender’s stress rates have been built into their search offering to enable landlords to understand clearly what they can borrow.

Mr Stewart said: “Landlords are being squeezed on all fronts.

“With higher interest payments that cannot be offset against tax, a need to improve the energy efficiency of properties, tenants that are likely to struggle to pay rent and the increasing cost of building materials.

“These are already impacting the profitability of BTL, and we expect more landlords to decide it’s now time to sell up.”

Seven in 10 landlords have properties with an EPC rating of D or below  BTL mortgages, EPC, Landlord News, Latest Articles

The scale of the situation for landlords having to improve their rental properties to meet the energy performance certificate (EPC) standard of C has been laid bare in new research.

According to Shawbrook, seven in 10 (71%) landlords in the UK still own rental properties with an EPC rating of D or below.

Their study also reveals that only a quarter of landlords’ portfolios contain properties that all meet the C target for energy efficiency.

Nearly four-in-ten (38%) only have properties that are rated D or below.

Property118.com has previously revealed that most landlords with properties below a C rating will have to spend thousands of pounds to bring them up to standard.

And readers have highlighted that BTL mortgage lenders are increasingly looking at the EPC rating of a property – though there is no legislation that states that properties must meet this standard by 2025, as many believe.

Currently able to let homes which have an EPC rating of D

While landlords are currently able to let homes which have an EPC rating of D and above, standards are widely expected to become tougher.

The government has previously set out an ‘aspiration’ for a minimum C rating in England and Wales by April 2025.

Future legislation could see landlords unable to take on new tenants or face fines if they fail to comply with the changes.

Landlords estimate that bringing the average property up to a C standard would cost them almost £2,000.

However, there is a concern that with the cost of labour and materials going up, landlords could be underestimating the cost of the work.

79% of landlords with a mortgage have at least one property rated D or below

The research shows that 79% of landlords with a mortgage have at least one property rated D or below, indicating a role for lenders in making efficiency improvements.

Shawbrook is continuing to offer EPC-related discounts as part of its commitment to sustainability in the rental sector.

The findings are part of Shawbrook’s second EPC report which explores the current EPC challenge, including the role of the cost-of-living crisis in driving change.

It also investigates the knowledge gap and the role of government and the wider industry to support landlords in improving efficiency.

‘Efficiency standards will become tougher in the future’

Emma Cox, the managing director of real estate at Shawbrook, said: “It’s likely that efficiency standards will become tougher in the future, which is just one of the reasons that landlords should take note of these proposals and start making a plan.

“Landlords should know that they are not alone in this.

“Lenders, including Shawbrook, are working hard to help drive awareness of regulatory change, support with creative product options, and offer practical support to customers and partners.”

Ms Cox added: “Standard products like bridging finance can also play a role in securing the future of the sector.

“During such a challenging period for the UK in general, we remain committed to bringing together all industry stakeholders to develop the conversation around EPCs, and to make real progress towards our shared goals.”

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