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Using the specialist lending market to help landlords mitigate costs and plug the advice void
Diversification has always been a key word for any successful portfolio, and thanks to their resilience to voids, now semi-commercial/part-commercial (Mixed use) properties are joining HMOs and MUFBs in landlords’ plans.
The market has successfully navigated its way through regulation, the credit crunch, increased regulatory scrutiny, the pandemic and the infamous mini-budget.
In the latest Q1 2024 Pegasus Insight Landlord Trends research report, landlords with buy-to-let mortgages – 61% of those surveyed have a mortgage on at least part of their portfolio – were asked to identify the various changes they had made over the past 18 months in order to lessen these rising costs.
Multiple responses were allowed with 30% saying they had renegotiated their mortgage with an existing lender, 29% had increased rents, 25% had cancelled plans to purchase additional property, 22% had renegotiated a rate switch with another lender, 15% said they had paid part of their monthly mortgage payment out of non-rental income like savings, and 15% said they had sold a property to reduce their mortgage outgoings.
17% of landlords said they now carry out more of the property management themselves in order to cut costs, while 8% said they had switched away from letting agents to self-management.
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. Whether this is a renegotiation with the existing lender, increasing rents, or funding those increases via savings so they don’t have to increase the rent, there is clearly a ‘needs must’ approach to dealing with this issue.
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 are clearly playing a vital and pivotal role for many landlords in an increasingly complex BTL marketplace. However, the research also suggests that 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.
With this comes opportunity for proactive advisers. Especially for those with a strong connection to a specialist BTL lending community which has the appetite, capacity and capability to deliver a range of solutions and quality of service which can help them to fill this advice void.
Take a look at our BTL calculator
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