Foundation Home Loans, in its latest Q1 2024 Landlord Trends report, has disclosed that a significant number of buy-to-let landlords have adopted various strategies over the past 18 months to manage increasing property management costs. These strategies include renegotiating mortgage terms, increasing rent, and selling properties.
The report, conducted by Pegasus Insight, involved 774 online interviews with landlords between March and April 2024. It revealed that 30% of landlords renegotiated their mortgages with existing lenders, 29% increased rents, and 25% cancelled plans to buy additional property.
Moreover, 22% switched mortgages to other lenders, 15% used non-rental income to cover mortgage payments, and another 15% sold properties to reduce their mortgage outgoings.
To further cut costs, 17% of landlords have taken on more property management duties themselves, and 8% have moved away from using letting agents to manage properties directly.
In terms of future financial planning, the survey shows that a substantial 41% of landlords plan to remortgage or opt for a product transfer within the year. While 68% used a mortgage adviser for their most recent buy-to-let mortgage, a significant minority still arranged mortgages directly with lenders or used online platforms.
Grant Hendry, director of sales at Foundation Home Loans, commented on the findings: “Understandably, landlords have been using all options at their disposal when it comes to mitigating the increase in mortgage costs they have seen as a result of higher rates, and there is clearly a ‘needs must’ approach to dealing with this issue.
“While we have seen rates come down off their 2023 highs, there will still be large numbers of landlords who are coming to the end of their current deals, and are looking for solutions in order to keep down any mortgage-cost increases.
“It’s clear this presents a real opportunity for advisers in the buy-to-let space, not least because a significant minority are still opting to go direct to their lender, rather than review what is available across the entire market.
“Plus, a number feel they are getting ‘advice’ in doing this, which may support their understanding of the rate type, but does not open them to what’s available from other lenders.
“Of course, the PT offer might well be the most suitable for the landlord at that time, but there are clear benefits in taking advice from a professional, independent adviser, especially given this is a competitive market and there may be other more suitable, cheaper product options available to them.
“As noted in the survey, there is a lot of maturity business coming to the table in 2024 and advice will be crucial for these landlord borrowers so they get the most positive outcome, plus a number of landlords want to add to portfolios, and there will be no stakeholder in the market who doesn’t welcome greater levels of purchase activity.
“It clearly remains challenging times for landlords but they are maintaining the profitability of their portfolios, yields continue to rise, plus there remains strong tenant demand against a backdrop of relatively low supply and higher population numbers seeking housing.
“Advisers can clearly play a vital and pivotal role for them, and our survey numbers suggest there are still a significant number of landlords who are not using the services of an adviser, and therefore missing out on a raft of product options, not forgetting the protection that comes with advice.”
