In Focus: Home ownership  

Landlords chose to increase rent rather than sell

Landlords chose to increase rent rather than sell

Mortgage brokers have said more landlord clients plan to increase rents rather than exit the market in response to the current economic climate.

Some 39 per cent of buy-to-let investors have said they plan to increase rents in response to rising interest rates, while 28 per cent said they plan to sell their properties.

The results come from research by broker forum Cherry, which included a survey of 200 mortgage brokers.

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It showed that only 3 per cent of landlords currently plan to expand their portfolios, while just over a quarter (28 per cent) plan to hold tight and make no changes.

Cherry director, Donna Hopton said buy-to-let investors have arguably been hit the hardest by the turbulence in the mortgage market given the impact higher interest rates have had on stress testing and the loan sizes available to property investors.

“If you then consider the stream of regulatory and tax changes that landlords have had to deal with in recent years, combined with upcoming EPC requirements, it’s unsurprising that so many are choosing to sell properties,” Hopton said.

“However, there are also millions of landlords who remain committed to the market, and it’s a market of continued demand from tenants and rising rents, so there will be plenty of opportunity for property investors,” she added.

MFS’s chief mortgage officer, Mike Cook added that despite the tricky conditions currently, we should be wary of overstating the declining appeal of buy-to-let.

“With huge demand from renters and long-term capital growth on offer, residential properties will continue to attract interest from a wide range of investors.

“The challenge right now is for landlords, brokers and lenders to work together for the greater good,” Cook said.

This starts with flexible and competitive bridging finance and mortgage products, Cook explained. 

“Brokers and lenders must provide landlords with access to the capital they need to purchase, renovate, refurbish and improve the EPC ratings on properties. This will ensure a buoyant rental market and help drive up standards,” he said.

The pressure faced by the buy-to-let sector has note gone unnoticed since September's "mini" Budget. Last week, MPs heard from mortgage experts about how buy-to-let investors and renters are set to feel the worst effects of higher interest rates.