Buy-to-let Landlords

‘Mortgage Prisoners’

October 13, 2023
Information published was correct at the time of writing

Many landlords cannot remortgage at current levels...

The Government’s commitment to assisting homeowners struggling with their borrowing is commendable. Additionally, extending similar support to landlords with buy-to-let mortgages could safeguard thousands of tenants.

However, measures to alleviate pressure on borrowers in the mainstream mortgage market have yet to be extended to those with buy-to-let mortgages. Private landlords currently provide housing for over five million households in the UK.


Current data from UK Finance indicates that there are approximately 1.3 million landlords in the UK with outstanding fixed rate buy-to-let mortgages, about 290,000 with tracker mortgages and 360,000 on their lender’s standard variable rate. This constitutes a significant portion of all outstanding mortgage debt across the UK.

With interest rates recently increasing from 4.5% to 5%, many individuals with mortgages may face rising costs immediately or in the future.


The UK housing market has largely remained resilient in recent years, but the latest rise in interest rates is likely to hit owners hardest. Tenant demand remains high, driving up rents, but the situation is more challenging for landlords and homeowners.


As landlords can no longer claim the same mortgage interest tax relief level as before, some increased costs of their buy-to-let mortgages will inevitably be passed on to tenants.

This, coupled with stricter affordability rules, means many landlords cannot remortgage at current rent levels, leaving them on their lender’s standard variable rate, which can approach 10%.

This situation creates ‘mortgage prisoners’, who may need to sell or significantly increase rent. Due to property investment dynamics, many landlords choose interest-only buy-to-let mortgages. The property is the endowment, and any outstanding mortgage balance is paid off upon the property’s sale, usually at a profit.


According to the National Residential Landlords Association, around 85% of buy-to-let mortgages are interest-only. Therefore, they could be most affected by rising mortgage rates, adding further pressure on renters and landlords.

Government measures for homeowners include requesting lender support, temporarily switching to interest-only, or moving to a new deal without a new affordability check at the end of their fixed rate. The question is, when will this be extended to landlords to ensure the stability of the rental market?

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