Home > News > UK Housing News: Landlord mortgage costs rise by 40%

UK Housing News: Landlord mortgage costs rise by 40%

Landlords are spending 40% more on mortgage interest year-on-year, research from Hamptons has found.

In August, mortgaged investors handed over an average of 37% of their rental income in mortgage costs, up from 28% the same month a year ago.

Annual rental growth doubled across Great Britain during September, with the average cost of a new let up 11.7% on last year.

The average mortgage rate on outstanding landlord debt stood at 3.4% in August, so it’s set to rise once products end their fixed and reduced periods.

Aneisha Beveridge, head of research at Hamptons, said: “With mortgage interest often landlords’ highest cost, the pace at which rates have risen has squeezed investors. Even if there are no further rate hikes by the Bank of England, we could see the amount of mortgage interest paid by landlords exceed £20bn over the next two years.

“This can eat up just over half the amount mortgaged landlords receive in rent. This will be unaffordable for some investors, who will likely bow out, keeping upward pressure on rents.

“A decade of cheap money and rising house prices encouraged many landlords to remortgage and extract cash from their buy-to-let when remortgaging. Our analysis suggests that most of this money wasn’t reinvested back into buying rental homes and was invested elsewhere or used to help their children buy their first homes. Rising rates will reverse this flow of finance, pulling cash out of the economy and back into the housing market as investors look to pay down their debt instead.”

Annual rental growth across Great Britain remained double during September, with the average cost of a new let up 11.7% on the same period 12 months ago.

This is the second fastest increase on record, surpassed only by August’s figure of 12.0%. The average rent in Great Britain now stands at £1,325pcm, up from £1,186 in September 2022.

Rents are rising faster in London than anywhere else. The average cost of renting a property in the capital was £322 pcm or 15.7% more expensive than it was at the same time last year.

Rental growth is lowest in Wales, at 5.2%, followed by the South West, at 7.6%.

HICH LTD has continually raised the quality standards in the UK property survey market. Our multi-award-winning property survey service has made us the leading reference in the property survey market.

We offer property survey services of the highest quality. Using state-of-the-art equipment, we provide excellent property surveys at affordable prices. Our prices are based on the number of rooms rather than the value of the properties, so you will always get the best value for money with our services.

Please look at our Trustpilot page and see why customers have chosen us as their favourite property survey provider!

At HICH LTD, we work to serve our clients and make the world a better place for everyone. We actively collaborate with NGOs to promote environmental, social, and charitable causes. If you want to know more about our efforts or how you can help, contact us at admin@hich-ltd.co.uk.

HICH LTD extends a warm invitation to contractors and service providers throughout the UK to join our network; by joining the Contractors and Service Providers Network, you will enjoy benefits such as a significant increase in customer flow, advertising on our high-traffic website, and direct contact with thousands of customers in your postcode area. Find more information here or by following the QR code in the video.