Landlords Make Radical Mortgage Changes to Ease Rising Costs

Many buy to let landlords have made financial changes during the cost of living crisis to mitigate the rising costs of operating private rental units, including renegotiating mortgage finance, increasing rent or selling property.

That’s the claim in the latest Landlord Trends report, carried out by Pegasus Insight for Foundation Home Loans.

Landlords were asked to identify the changes they had made over the past 18 months: 30% said they had renegotiated their mortgage with their existing lender; 29% had increased rents; 25% had cancelled plans to purchase additional units; 22% had remortgaged to another lender; 15% had paid part of their monthly mortgage payment from savings or other non-rental sources; and 15% said they had sold a property to reduce outgoings.

One in six landlords now carry out more property management themselves in order to cut costs, while 8% had stopped using letting agents completely.

The research, comprised of 774 online interviews with landlords, was undertaken between March and April this year.

Foundation Home Loans director of sales Grant Hendry says:  “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.

“It’s clear this presents a real opportunity for advisers in the buy-to-let space, not least because a significant minority are still opting to go direct to their lender, rather than review what is available across the entire market. Plus, a number feel they are getting ‘advice’ in doing this, which may support their understanding of the rate type, but does not open them to what’s available from other lenders.

“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.”

Just over 40% of landlords said they would remortgage or opt for a product transfer this year; 49% said they had one mortgage to refinance, 24% had two, 11% had three, 7% had four, while 9% said they had over five mortgages due for refinance in the next 12 months.

Some 68% said their most recent mortgage had been negotiated through an adviser; this figure rose to 72% for portfolio landlords.

Some 26% of landlords had arranged their most recent mortgage direct with a lender, 3% had done so via an online broker or a robo-advice platform, while 1% had used a comparison website.

Hendry concludes: “Advisers can clearly play a vital and pivotal role for them, and our survey numbers suggest there are still a significant number of landlords who are not using the services of an adviser, and therefore missing out on a raft of product options, not forgetting the protection that comes with advice.”