Almost 150,000 landlords facing ‘significant’ jump in mortgage costs in 2024
2 min read
Almost 150,000 buy-to-let landlords will see their monthly mortgage payments jump by hundreds of pounds in 2024 as long-term fixed deals come to an end.
144,000 landlords will come to the end of five-year fixed deals in 2024 and face remortgaging at starkly higher rates, according to official figures.
The average deal offered to a buy-to-let landlord in 2019 carried a rate of 3.5pc. However, landlords now face rolling onto deals at between 4.5pc and 5pc, according to forecasts from Capital Economics.
For a buy-to-let landlord with a £150,000, interest-only loan, it means monthly payments could increase by almost £200 a month, or an extra £2,250 a year.
Darryl Dhoffer, an advisor at The Mortgage Expert, said: “There will still be significantly higher mortgage repayments to pay for those coming off lower interest rates.”
Some landlords could see their mortgage rates jump by as much as three percentage points when they refinance, Mr Dhoffer warned, which would add £450 to the monthly cost of a £150,000 loan.
Reductions in tax relief on buy-to-let mortgages, which were phased in between 2017 and 2020, have amplified the impact of higher rates on landlords who own properties in their own names.
The new rules mean landlords are no longer able to deduct all of their mortgage interest as a business expense when they calculate their tax bill. This means they have to pay tax even if their properties are loss-making.
Michelle Lawson, director at Lawson Financial, said landlords rolling off five year fixed deals will be forced to raise rents as they pass on these costs to their tenants.
Ms Lawson said: “Profit margins have dropped massively for landlords due to the tax and regulatory burdens.”
The 144,000 figure is based on official mortgage data from UK Finance, which represents Britain’s banks and lending institutions.
More than 210,000 buy-to-let mortgage holders will come to the end of fixed-rate deals of all lengths in 2024, according to UK Finance data.
