What are YOU going to do when mortgage interest rates have reduced your rental profits to zero?

The cynic in me says this an advertisement for selling the services of Property 118 Landlord's Tax Planning Team. I simply don't take anything at face value any more, especially when the first reply is a form to complete for Tax Planning Services.

Reply to the comment left by SimonP at 27/10/2022 - 13:42
That's what being a landlord does to some of us.

My parents taught me that if I don't have anything positive to add ZIP IT

Reply to the comment left by Monty Bodkin at 27/10/2022 - 13:04
Sorry, but without understanding why a landlord cannot now withstand a 2% increase, is uninformed. Please ask why, then feel free to comment.

Surely anyone in our business knew that interest rates were going to go up sooner or later and were preparing.

I have five flats in SE London valued at ~£800,000 in 2012 and now valued at ~£1.5m.

My outstanding mortgage has dropped from £600,000 in 2012 to £240,000.

I repaid debt during the golden days to prepare for higher rates in the future.

My current rate is 2.19%, expires 2 November 2023 and my lender allows me to overpay three times the monthly interest without penalty.

When the rates go up, all I need do is reduce my monthly overpayments.

We must all have know that the Golden Era would end.

Any landlord unprepared is a goof!

Clause 24 has pushed me artificially into the 40% tax band. So lenders now need 145% rental cover for me to remortgage. (I purchased my properties back in 2007 when rental cover requirement was 100%). Without Clause 24 I would only need to evidence125% cover. This is another issue with Clause 24 that may don’t realise.

Reply to the comment left by Dylan Morris at 28/10/2022 - 10:28
In 2016, I took out a £750k BTL mortgage with a plan to put my house in London on the rental market, and use the equity to buy elsewhere. The rent would have been £3k pm and the mortgage £2.5k pm. Without S24, the numbers looked good. I had cut back on work in preparation for retirement, which dropped me comfortably into the 20% tax bracket, topped up with rental income. The £36k pa rent plus other rental income would have pushed me well into the 40% bracket, which I was OK with after the mortgage relief was applied, but the impact of S24 would have dramatically increased my taxable income. I changed my plans and sold the house and my other London property. 4 beds lost to the PRS. I have since sold another flat (2 beds) and will sell my final flat ASAP.

Reply to the comment left by David Griffith at 27/10/2022 - 10:30
Used to like this site just spam really nowadays... george at 73 didnt think to fix when 2% for 10 years??. he was a gambling man at 73 crazy ... 2% will wipe george out and still didnt fix.. george must have been around in days of high interest rates...more fool george age didnt bring wisdom.. sell up george and enjoy what times left with the cash id say..

We are in a similar position to your story. We have 6 properties which we rent to families with children. Our rents are below local average.
We have lived of the income from fostering for 20 years, with a plan to live off the rentals as we retire.
Now the time has come for us to put our feet up and start taking life easy.
Unfortunately as with your story above, our mortgages are going to increase to a point where we will not make enough for us to live on. The families living in our houses can not afford to pay much of a rent increase, as cost of living is hitting us all.
We don't feel selling houses and making our tenants homeless is an appealing option. We are landlords that care. We have some money put aside to weather the storm for a few years.
We value this group because its good to know others are in the same position. Also good to hear there are options available as we need them. Thank you for that.
Some of the people on this sight are know it alls, they love putting other landlords down. It's not helpful!!

I believe we are engaged in a game of chicken between the Bank of England and the markets. The Bank wants to see inflation come down but doesn't want to crash the economy as that is also against their brief from HM Government who definitely don't want to see a long and deep recession. Energy and other commodity prices are dropping quietly and demand is falling due to higher household costs. I believe we will see interest rate policy loosening by the spring and medium term gilt and swap rates falling leading to lower fixed rate mortgages. My advice would be "don't panic Mr Mannering" and don't buy the scare tactics which are designed to reduce demand without raising interest rates too far. Watch the autumn statement carefully as I suspect this will be designed to exert further downward pressure on medium term rates as this is also in the Government's interest bearing in mind the cost of servicing their own huge debt. For once us borroeers and the Government are on the same side. Lower rates are a matter of months away. Think carefully before taking an expensive fixed one now would be my advice. Better times are coming

George, you are not the only person in this position; I am also.
It has always been my plan to sell off some of my portfolio in the longer term and use the equity to pay off other mortgages. I hoped to be close to being mortgage free by the time I get to your age.
The steep rise in interest rates are causing me to do this much sooner than I had planned. With this in mind, I have already served a Section 21 notice on one set of tenants in the hope that I can make use of the CGT allowance this tax year. Then I will do another one the year after and keep going until the books balance again.