24/02/2023
Landlords Are Selling – And it Isn’t Hard to See Why
The downturn in the housing market is continuing, roughly as expected, a slowish puncture rather than a blowout, with prices and activity softening, and quite a big drop in mortgage approvals partly reflecting last autumn’s mortgage rate shock.
But how are landlords responding to this downturn?
CIL looked at the vulnerability of this private rental stock to rising mortgage rates.
At a 2% mortgage rate, some 100,000 suffer from negative cash flow – rents being insufficient to cover mortgage payments – rising to 400,000 at 4% mortgage rates, and a very hefty 900,000 at 6% mortgage rates.
This leaves landlords with a range of options, including raising rents, accepting lower profitability or negative cash flow, refinancing, or selling some or all of their properties.