More misery for UK landlords and renters

Heather Powell, Head of Property said:

The April – June 24 mortgage arrears stats published today show that Landlords are struggling to afford to keep their buy to let properties. The arrears stats for buy to let mortgages are slowly increasing. 13,570 buy to let mortgages have arrears of more than 2.5% of the outstanding balance, an increase of 1% over the first quarter in 2024, and 710 buy to let mortgage properties were taken into possession in the quarter, 13% up on the first quarter of 2024.

While these repossessions may release properties for families to buy, it will add further pressure to the rental market, where the demand for rentable properties is far higher than supply. It is likely that these repossessions have in part arisen where landlords increased their borrowings when remortgaging properties. Those landlords are now getting caught out by the significant increase in interest rates from September 2022.

Landlords who own their properties are also struggling due to the reduction in tax relief for the interest paid on buy to let mortgages, which has had a major impact on their cash flow. Many landlords have decided to sell up, encouraged by the decrease in the last conservative budget of the top capital gains rate payable on the sale of buy to let properties from 28% to 24%.

Combined with the expectation that the new government are going to increase the rate of capital gains tax (CGT) many landlords are likely to be considering their investment strategy – and may sell up sooner rather than later to avoid the CGT rise.

However, the stats also show that a significant number of landlords have not managed to sell before their lenders have stepped in and taken possession of their properties. Overall, this paints a very concerning picture of the UK rental market.

Would you like to know more?

If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact or Heather Powell using the form below.