Will Buy-To-Let Still Be Profitable for Wellingborough Landlords?

Rules have changed for landlords over the past few years. Increased legislation, new tax laws and the cost-of-living crisis putting strains on tenants being able to pay their rent (this isn’t a criticism of tenants who find themselves struggling in these times, just a reality of what we are all currently facing).

And now mortgage rates are likely to be going up for many. In the summer, a landlord could get a 75% loan-to-value mortgage fixed at under 2% interest rate for five years. Now, the best five-year deals sit close to 4.5%.

This means for a two or three bed terraced property costing £175,000, the mortgage payments (on a 75% loan) will be nearly £275 more expensive per month. In many cases, unfortunately, we will see much of this increased cost passed on to tenants.

Though the number of landlords who have had to evict tenants due to non-payment has gone up by 160% over the past year, it was only a little over 2% of UK rental properties and just 0.045% of tenants were evicted via courts.

Recent studies using statistics from the Government and other letting industry sources show that landlords who didn’t use a letting agent to manage their property were 272.5% more likely to be two months or more in rent arrears in 2021. It pays to use a letting agent!

Landlords will now also be faced with new minimum energy efficiency standards in 2025, with a minimum EPC rating of C gradually being phased in. Some experts suggest this could cost over £10,000 for the average property.

However, in 2018, similar legislation was introduced enforcing all rental properties have an EPC rating of at least E. If the property was lower than this, the maximum the landlord was compelled to spend was £3,500 on efficiencies. I expect something similar to happen for the changes due in 2025.

The next few years will be challenging for everyone. Homeowners, landlords and tenants.

House prices will likely dip (not crash) in 2023 as affordability is stretched, mortgage payments will increase and rents, having already increased by nearly £100 PCM (14%) since the start of 2021, will unfortunately follow suit.

The hypothetical two or three bed terraced property may now be available to buy for £155,000 which will require a deposit of £40,000, with interest payments (at 4.5%) of around £430 PCM and a rental income approaching £900 PCM. There could still be opportunities to expand your portfolios, despite the doom-mongering in the media.

For landlords, planning will be key to ensuring you can maintain a profitable and compliant portfolio.Rules have changed for landlords over the past few years. Increased legislation, new tax laws and the cost-of-living crisis putting strains on tenants being able to pay their rent (this isn’t a criticism of tenants who find themselves struggling in these times, just a reality of what we are all currently facing).

And now mortgage rates are likely to be going up for many. In the summer, a landlord could get a 75% loan-to-value mortgage fixed at under 2% interest rate for five years. Now, the best five-year deals sit close to 4.5%.

This means for a two or three bed terraced property costing £175,000, the mortgage payments (on a 75% loan) will be nearly £275 more expensive per month. In many cases, unfortunately, we will see much of this increased cost passed on to tenants.

Though the number of landlords who have had to evict tenants due to non-payment has gone up by 160% over the past year, it was only a little over 2% of UK rental properties and just 0.045% of tenants were evicted via courts.

Recent studies using statistics from the Government and other letting industry sources show that landlords who didn’t use a letting agent to manage their property were 272.5% more likely to be two months or more in rent arrears in 2021. It pays to use a letting agent!

Landlords will now also be faced with new minimum energy efficiency standards in 2025, with a minimum EPC rating of C gradually being phased in. Some experts suggest this could cost over £10,000 for the average property.

However, in 2018, similar legislation was introduced enforcing all rental properties have an EPC rating of at least E. If the property was lower than this, the maximum the landlord was compelled to spend was £3,500 on efficiencies. I expect something similar to happen for the changes due in 2025.

The next few years will be challenging for everyone. Homeowners, landlords and tenants.

House prices will likely dip (not crash) in 2023 as affordability is stretched, mortgage payments will increase and rents, having already increased by nearly £100 PCM (14%) since the start of 2021, will unfortunately follow suit.

The hypothetical two or three bed terraced property may now be available to buy for £155,000 which will require a deposit of £40,000, with interest payments (at 4.5%) of around £430 PCM and a rental income approaching £900 PCM. There could still be opportunities to expand your portfolios, despite the doom-mongering in the media.

For landlords, planning will be key to ensuring you can maintain a profitable and compliant portfolio.