The Cost Of Being A Landlord Up 76% In A Year

by | Thursday 30th Mar 2023 | Mortgage News

The cost of being a landlord has risen over the last year

The cost of being a landlord has risen over the last year (Source:

New research carried out has revealed that the overall cost of being a landlord and maintaining a buy-to-let mortgage has increased by 76% in the last 12-months alone, as mortgage interest rates have soared and the cost of living has gripped property investors. There has always been a stigma towards landlords and the unfair stereotype of a money hungry multimillionaire bleeding tenants dry every month is simply not the case for most buy-to-let owners. The sad fact is that a lot of these people rely on the income they receive from their investment property as their main source of money, and if they are unable to make any profit from the property, then they quickly find themselves in the red.

Cost Of Being A Landlord Has Increased

Over the last year, it is undeniable that mortgage borrowers across the spectrum have been impacted in some way or another by the current economic crisis. Whether that means that your mortgage rates have increased, or the cost of running your property have gone through the roof and you now have less money in your pocket per month. We hear a lot about residential borrowers struggling with rising interest rates and the cost of living, but not so much about buy-to-let borrowers. The buy-to-let mortgage market has taken a huge hit recently and the question of whether or not investing in property is still worth it, has been talked about a lot.

Specialist lender Octane Capital have released the results of a recent study in to buy-to-let landlords that they have been carried out. The report, among other things, reveals the shocking news that the overall cost of being a landlord has risen by 76% since 2022. That means, the cost of getting a mortgage, the cost of paying a mortgage, the cost of running the property, and maintaining the home. Octane’s research specifically found that the average buy-to-let borrower’s mortgage borrowing is £217,364 and landlords are having to put down at least a 25% deposit on the average UK property price of £289,819.

Landlords Are Losing Money

Currently the average buy-to-let mortgage rate is around 5.32% meaning that the average capital and interest mortgage payment for a buy-to-let property would be £1,312 per month if taken over 25-years. According to Octane, the average mortgage rate has increased by 2.12% in the last year, meaning that the average monthly cost of a full mortgage repayment has increased by 31.6%, adding £315 to the cost of buy-to-let borrowing.

It is important to note that most buy-to-let landlords do opt to pay their mortgage per month on an interest only basis rather than capital and interest, as this usually gives them the highest rental income yield. On an interest only basis, this would mean that the payments would be around £964 a month. Still significantly more than they would have been when rates were as low as 3.2% (£580 p/m).

For someone who solely relies on income from buy-to-let investments, someone who has invested their life savings in the property, this rate increase will have a significant impact on their income. Another factor to consider when talking about the rising cost of being a buy-to-let landlord is the rising cost of energy bills. Lots of landlords will leave the cost of gas, electricity, water in the hands of their tenants but for landlords who offer ‘bills included’ rental contracts, they could see their utility bills go up by hundreds per month during the economic crisis.

What Can I Do About The Rising Cost Of Being A Landlord

Despite these rising costs, Octane’s research also shows that the market for for buy-to-let investments is still strong. The total value of loans issued to buy-to-let investors has actually increased by 12% over the last 12-months. So what can you do to make sure that your investment is as profitable as possible? Unfortunately we can’t bring your monthly heating bills down. Likewise, we can’t force the lenders to bring their interest rates down. But what we can do is advise you on the most competitive mortgage rates and the most beneficial mortgage loan structuring to ensure that you and your tenants are as safe and secure with the property as possible.

We at Oportfolio have access to lots of buy-to-let lenders and hundreds of buy-to-let products, and our job is to help you find the most competitive products on the market. Meaning that we can help you to secure a lower than average interest rate, so that you aren’t paying above the odds on your loan. We can also help you to re-structure your loan and payment plan so that you aren’t losing out on profits because of the increasing cost of living.

If you or someone you know is a buy-to-let landlord and need to speak with a professional about your mortgage options, give our specialist buy-to-let brokers a call today for a free initial mortgage consultation. We are here to help.

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