Buy to let landlords adapt to rising costs

Many buy to let landlords in the UK have adjusted their finances in the past 18 months to deal with rising costs, according to a new report.

The research from Foundation Home Loans found that landlords are taking various steps to deal with growing overheads, including renegotiating mortgages, increasing rents and even selling properties.

The report, which surveyed more than 770 landlords, reveals that 30% of landlords have renegotiated their existing mortgages, while 29% have raised rents.

Also, 25% of landlords say they put on hold plans to buy additional properties.

Landlords are also looking to save on management fees, with 17% taking on more property management tasks themselves and 8% switching from letting agents to self-management.

‘Using all options at their disposal’

Foundation’s director of sales, Grant Hendry, said: “Understandably, landlords have been using all options at their disposal when it comes to mitigating the increase in mortgage costs they have seen as a result of higher rates, and there is clearly a ‘needs must’ approach to dealing with this issue.

“As well as remortgaging to a new lender for a better rate or renegotiating with their existing lender (taking a product transfer), a great many are funding increases via savings or selling properties, so they don’t have to increase rents.”

He added: “While we have seen rates come down off their 2023 highs, there will still be large numbers of landlords who are coming to the end of their current deals and are looking for solutions in order to keep down any mortgage cost increases.”

Positive signs for the private rented sector

Despite the financial challenges, the Foundation report highlights positive signs for the private rented sector.

It says that more than 40% of landlords are planning to remortgage or transfer their mortgages in the next year.

And 68% said they had used a mortgage adviser for their most recent buy to let mortgage, demonstrating the value placed on expert guidance.

Future investment plans, 48% landlords will use BTL mortgages, while 38% plan to buy outright and a similar number will release equity.

Mr Hendry said: “It clearly remains challenging times for landlords, but they are maintaining the profitability of their portfolios, yields continue to rise, plus there remains strong tenant demand against a backdrop of relatively low supply and higher population numbers seeking housing.”

Share This Article