Introduction:
Landlords in the UK are feeling neglected as the government’s mortgage support measures fail to include buy-to-let customers. Brokers warn that this oversight could result in landlords passing on higher costs to tenants, leading to an increase in rental prices. While the recent charter between the UK’s major lenders and the Chancellor addresses concerns of residential mortgage customers, it excludes buy-to-let customers from receiving similar assistance. This discrepancy raises questions about fairness and the potential impact on the rental market.
Landlords Left Out of Mortgage Charter:
The charter, implemented last month, offers various options to residential mortgage customers concerned about rising rates. These options include switching to interest-only deals for six months or extending mortgage terms to reduce monthly payments, with the intention of reverting within half a year. However, the footnotes to the charter explicitly state that these commitments do not extend to buy-to-let customers, leaving landlords without the same level of support.
Brokers Express Concerns:
Industry experts argue that there is no justification for excluding landlords from the charter. They warn that any increase in landlords’ costs will inevitably be passed on to tenants, leading to higher rental prices. Nick Mendes, mortgage technical manager at John Charcol brokers, emphasizes that landlords are consistently overlooked when it comes to government support. He explains that current mortgage rates force landlords to either stick with their existing lenders or consider selling their properties, both of which result in higher costs for tenants.
The Impact on Landlords and Tenants:
David Hollingworth of L&C Mortgage acknowledges that while some measures in the mortgage charter may not apply to landlords due to the interest-only nature of their mortgages, there is no reason why they should be excluded altogether. Hollingworth highlights that landlords, like homeowners, need assistance to navigate higher interest rates. As landlords face higher rates compared to residential mortgage customers, the exclusion from support measures exacerbates their financial burden. If landlords pass on these increased costs to tenants, private rental costs in the UK could rise even further.
Call for Government Action:
Brokers and industry professionals argue that the government should make the environment for landlords more tolerable and encourage lenders to extend support to buy-to-let customers. Bob Singh, founder of Chess Mortgages, criticizes the rushed implementation of the new measures, suggesting that buy-to-let landlords have been unjustly left out as if they are immune to the effects of high interest rates. By addressing this oversight and ensuring equal support, the government can help stabilize the rental market and prevent further increases in rental prices.
The HM Treasury’s Response:
In response to the concerns raised, a spokesperson from the HM Treasury emphasizes their commitment to driving down inflation as the most effective way to assist both mortgage holders and renters. They highlight the government’s plan to halve inflation this year and return it to 2 percent. Regarding the mortgage charter, they reiterate that it provides targeted support measures for mortgage holders who fear high interest rates and the risk of losing their homes. Additionally, they mention the financial assistance provided to households, averaging £3,300, to alleviate the cost of living.
Conclusion:
The exclusion of buy-to-let landlords from the government’s mortgage support measures has ignited concerns among brokers and industry professionals. With mortgage rates on the rise, landlords may have to pass on the increased costs to tenants, potentially exacerbating the already high rental prices in the UK. It is crucial for the government to address this oversight and extend support to buy-to-let customers. By doing so, they can ensure fairness and stability in the rental market while alleviating the financial burdens faced by both landlords and tenants.