5th
Jan 2024
Nearly two thirds of PRS landlords are having to accept that they will be paying higher mortgage costs over the year which will increase rents.
A trade body’s recent research finds that although more than a quarter of landlords said they are planning to re-mortgage this year and 60 per cent believe their mortgage payments will rise.
The Bank of England has recently confirmed that the 5.25 per cent base interest rate will not be cut from its fifteen year high.
Latest data from a leading estate agency finds UK landlords will now pay £15 billion per year in mortgage interest, which at the end of this year will be 40 per cent higher than 2023.
The BTL market is more at risk to the impact of higher interest rates as according to the BofE 82% of PRS mortgages are interest-only, whereas it is only 11 per cent of owner occupiers mortgages.
The Bank of England sent out the warning that for the foreseeable future “higher rents are likely, given rising mortgage costs and strong demand.”
In spite of rising rents a real estate company claims that landlords are experiencing the lowest levels of profit since 2007, so in many respects rent increases are not down to greed but for covering ever increasing costs.
A trade association is calling for the government to provide necessary support to buy-to-let landlords by cutting tax hikes which have caused so many rental properties being sold and rents rising.
A spokesperson for an association says: “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.”
Research held by the association found that removing the extra 3 per cent stamp duty surcharge on additional homes would encourage an additional 900,000 homes over the next ten years; this would provide a rise in income and corporation tax receipts to the HMRC amounting to a £10 billion windfall.
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