Mortgage Woe for Steadfast Landlords

From spikes in inflation, the turbulent political landscape, legislation changes… It’s been a tricky time for landlords. 

There’s been plenty of change in the property market over the past few months. However, despite the upheaval, with a glut of landlords leaving the market, things have looked pretty positive for the remaining landlords (although not so much for tenants, with rents steadily creeping up to meet demand). 

But is that about to change? The Royal Institute of Chartered Surveyors (RICS) has released a report that suggests that they have seen a drop in interest from UK-based investors over the past six months, with a further report from rating agency Moody’s suggesting that house prices will fall by 10% in the next two years

Not great news for landlords who may be reliant on high values to secure decent mortgage repayments as interest creeps ever higher. Coupled with potential hefty costs to meet the newly stringent regulatory requirements, it could get pretty pricey to pay for a property. 

Not only is this bad news for the landlord’s bottom line – as ever – it’s bad news for tenants too. The Bank of England has estimated that rents will have to increase by up to 20% to meet costs. With the cost-of-living already putting most of us under pressure, it’s highly unlikely that many tenants will be able to stretch to this

William Delaney, at Coopers of London Limited, says:

The dysfunctional court process in possession cases, egregious tax and compliance measures, and interest rates, are all taking their toll. No doubt landlords will then be blamed for soaring rents and lack of supply.

Unsurprisingly, with so much change on the horizon, landlords aren’t the only ones feeling nervous. Lenders are dubious to commit too, and since the end of May the number of products available to landlords looking to better their options has dropped from 2,748 to 2,343. Those that are left aren’t exactly filled with joy either – the average rate on two-year fixed BTL mortgages has gone up to 5.61%, whilst the average rate on a five-year fixed has gone up to 5.52%.

That said, there are some options that still provide landlords with a little relief. Paragon Bank is bucking the trend and has just launched a new range of limited edition BTL mortgages – a possible life raft for landlords that feel like they are all at sea. 

Whilst it may seem like it is a never ending run of bad news, there are some glints of positivity out there. If you’re looking to secure a new deal, get in touch with your specialist BTL broker (we have a fab team here at Mashroom Mortgages who really know their onions and are always happy to help). 

Are ASTs going to be shown the door? 

Oh, the Rental Reform Bill. Is there anything this bloody bill isn’t trying to adjust, change, or generally fiddle with? 

A new change has been proposed, which will see a tweak to Assured Shorthold Tenancies (ASTs) – yep, the tenancy agreement 99% of tenancies in the UK are based on. 

AST’s run for a 12-month period. The change would see ASTs become periodic, meaning the tenancy can roll on, with no fixed end date.

From a landlord’s point of view this throws up a couple of issues. It means your tenant can end the agreement with only one month’s notice. It may also make tenants a little less likely to commit long term… when ending a tenancy and moving on is so simple, is it possible that renting will become more transient again? 

A landlord based in the North of England has launched a Parliamentary petition asking the government to drop these plans from the new Bill, saying: 

I genuinely feel that this will not do anything to stop bad landlords but will increase issues with tenants who can choose to leave whenever they want with a minimal notice period.

So, what do you think? Is this the refresh ASTs need to help shake things up, or is this a step too far? Let us know via the Mashroom Landlord Community Facebook page!

Comments 0


Tenancy deposit
Money shield
Local heroes
Approved code
Property ombudsman
Open banking
Mashroom is an appointed representative of Adelphi Insurance Brokers Ltd. Adelphi Insurance Brokers Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Their Financial Services Register number is 594620, with permitted business activities being introducing, advising, arranging, dealing as agent, assisting in the administration and performance of general insurance contracts and credit broking in relation to insurance instalment facilities. You may check this on the Financial Services Register by visiting the FCA’s website, or by contacting the FCA on 0800 111 6768

Mashroom Mortgages is a trading name of Emash Ltd which is an appointed representative of Mortgage Advice Bureau Limited and Mortgage Advice Bureau (Derby) Limited which are authorised and regulated by the Financial Conduct Authority.
Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured upon it. A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £495.
Emash Ltd. Registered Office: 21 Navigation Business Village Navigation Way, Ashton-On-Ribble, Preston, Lancashire, England, PR2 2YP. Registered in England Number: 11735831.