12th
Oct 2023
Many landlords have either had their mortgage costs increased or will be facing rises in the near future which are not in their entirety being passed onto tenant’s rents, according to latest research.
A specialist lender has studied differentials of rent rises against average BTL mortgage payments, which are based on the average new tenancy rental monthly cost against the average cost of a BTL mortgage with a 40% deposit.
The research shows that mortgage rates have increased by 13% year on year, whereas rental price growth is 9.9%.
However this shows a trend is developing of mortgage payments catching up with rental costs, as mortgage payments latest average is £982 per month against average rentals’ monthly cost of £1,068.
Chief executive of the specialist lender, Jonathan Samuels, said: “While landlords are often blamed for ramping up rents, in many cases buy to let mortgage costs are rising faster than the cost of new tenancies.
“This is particularly the case in Yorkshire and the Humber and the East Midlands, where the markets clearly don’t allow landlords to recover all their higher outgoings in the form of rents.”
He added: “This year has undoubtedly been a tough one for landlords and renters – as neither has been able to escape rising costs.”
The firm’s study also highlights regional variations as some are experiencing mortgage increases higher than twice the rate of rents which suggests that many landlords are not increasing rents to cover the full cost of their rising payments.
The regions where this occurs are Yorkshire and the Humber and the North East.
Throughout Yorkshire mortgage payments have on average increased by 15.2% year on year to £712 whilst rents’ have risen by 7.4% to £826 year on year.
North East’s mortgage rates have increased by 15.4% to £547 year on year whist rents have risen by 7.6% to £636.year on year.
And of course London is an exception to the trend as rents have risen by 12.9% year on year whereas average mortgage payments have had an 11.4% rise. This suggests London’s tenants are having to shell out on average £2,109 per month for new tenancies which is above the average mortgage repayment cost of £1,789.
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