Mortgage Crisis pushes out small landlords as corporates take over

Dashly, a platform that monitors over £100 billion of mortgages, says landlords in London renewing loans soon will be, on average, £6,384 worse off each year.

Based on a sample of 1,000 buy-to-let mortgages in the capital with initial rates expiring between this month and April 2024, and assuming borrowers switch to the best available rate instead of lapsing onto their standard variable rate, the analysis found that the average monthly mortgage payment for London landlords is set to rise from £662 to £1,194 as the remortgage crunch takes hold — an increase of £532.

And over a year that’s £6,384.

Brokers and lettings agents confirmed the gravity of the situation. 

Imran Khan, co-founder of Canary Wharf-based lettings specialist Property Loop, says: “London landlords are nearing crisis point. In my 20 years working in property, I've never seen such a precarious landscape."

Khan adds that it's not just smaller, amateur landlords who are suffering. “One recent example involved a landlord with a 100-property portfolio who had to hand back keys due to untenable mortgage payments.”

The result of higher interest rates and increased taxation, Khan says, is “an unprecedented exodus of landlords from London, which risks driving up rental prices due to decreased supply".

One professional portfolio landlord in the capital, Kundan Bhaduri of The Kushan Group, says: “With average monthly mortgage payments set to rise from a relatively benign £662 to a bone-crushing £1,194 the current situation for most small landlords in London is like riding a unicycle on a tightrope over a pit of sharks.”

Bhaduri adds: “With most small landlords in the capital only having small savings to hand, it's hard to see how a major repossession crisis can be averted. The Government and Treasury in particular must step in immediately to stop the brutal treatment of the buy-to-let mortgage sector."

Craig Fish, managing director at London-based mortgage broker Lodestone, believes many landlords are now looking beyond the capital, in many cases far beyond, to make the numbers stack up, which in turn will impact London house prices:.

He says: “The mass exodus will soon begin, which in turn will have a significant downward impact on property prices in London and the south-east. Many of our professional landlord clients have now shifted their attention away from the capital to the Midlands and north of England where rental yields are more favourable. 

“We are also witnessing a similar exodus in the lender community, with many high street lenders making changes that eliminate most landlord scenarios. This will result in only specialist buy-to-let lenders remaining, with a focus on limited company lending.”

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