Landlords are bracing for higher rates as approximately 350,000 Buy-to-Let (BTL) mortgages are set to mature over the next 12 months, according to the latest Private Rented Sector Report from The Mortgage Works.
This development comes amid significant shifts in the rental market. Data from the English Private Landlord Survey reveals a “marked change” in the landscape, with the proportion of landlords owning five or more properties soaring from 5% in 2010 to 18% in 2021. Conversely, the percentage of landlords with just one rental property plummeted from 80% in 2010 to 43% in 2021.
The report highlights ongoing challenges for landlords, compounded by notable rate increases in 2021. Maintaining current property portfolios may have long-term financial implications, particularly as interest rates on maturing BTL mortgages—averaging around 2.7%—could lead to a potential ‘payment shock’ of £225 per month.
Despite these hurdles, the sector has experienced “strong rental growth” in recent years, partly due to an ageing population struggling to enter the property market. The number of private renters aged between 55 and 64 surged by 80% from 2013 to 2023. Meanwhile, homeownership within this age group continues to decline, now nearly 10 percentage points below its peak in 2007.
Damian Thompson, Director of Landlord at The Mortgage Works, emphasized the importance of understanding these trends. “The sector continues to support the lives of millions of people across the UK by providing homes for those who either can’t afford to buy or prefer not to own a home,” he stated.
Looking ahead, Thompson expressed keen interest in forthcoming government plans aimed at creating a “stronger, fairer private rented sector,” where legislation benefits both landlords and tenants.