New research recently carried out for the National Residential Landlords Association found that almost a third of private landlords with buy-to-let (BTL) mortgages face the prospect of significantly higher costs this year. Apparently, some 63% of landlords have a BTL mortgage on at least one property and of this group, 29% plan to re-mortgage at least one during 2023.
This is bad news for tenants as the research also found that although 65% of landlords in England and Wales unsurprisingly confirmed increased demand for private rented accommodation during Q4 2022, 30% of them said they plan to cut the size of their portfolio in 2023, the highest level of planned disinvestment seen in more than six years. Only 9% said they plan to increase the size of their portfolio over the coming year.
Rent rises for tenants are inevitable, due not only to landlords’ mortgage increases, but also because of market forces, the simple rule of supply and demand when there is a shortage. And there are lots more reasons why landlords are considering giving up, such as increases in Capital Gains Tax when an investment property is sold; the EPC changes requiring energy saving improvements in a property, and compliance with further fire safety regulations, to name but a few. And that doesn’t include the forthcoming Renter’s Reform Bill whereby tenants will receive new rights to challenge landlords on rent hikes and substandard homes, legislation the government believes will “redress the balance between landlords and the 4.4million tenants living within it.” But some landlords have very negative views on some of the Bill’s clauses.
All of this will undoubtedly contribute to a greater shortage of, or higher costs for the private rental sector, so we really hope those property owners whose buildings are currently sitting vacant, will turn to guardianship and do their bit to help those struggling to find a home in these difficult economic times.