‘My buy-to-let profits are disappearing before my eyes’

‘my buy-to-let profits are disappearing before my eyes’
© Provided by The Telegraph house rent profit falling buy to let

Landlords stuck on variable rate mortgages are seeing their profits vanish as lenders increase their bills as much as six times in six months.

Rising interest rates mean buy-to-let investors with standard variable rate mortgages are already at “the tipping point” of having loss-making properties, as their costs soar.

Cameron O’Dell*, 29, is seeing his buy-to-let margins get hammered because he is on SVR. “My mortgage lender has increased my mortgage rate six times since Christmas. Some of the letters telling me the rates are going up again have been less than two weeks apart,” he said.

Over the last six months, his mortgage rate has jumped by one percentage point. This means his monthly mortgage bill has increased by 20pc.

The monthly profit on his buy-to-let, which rents out for £600 per month, has fallen from £170 to £100.

The Bank of England has raised interest rates four times in total so far this year, opting last week to raise the Bank Rate by a further 0.25 percentage points to 1.25pc. Mr O’Dell has not yet been updated on the impact of this latest rate rise announced last week, which means his costs are likely to rise further.

“From an investment point of view, my profitability is becoming close to zero and my outgoings on the property could quickly exceed the income. I am close to the tipping point,” Mr O’Dell said.

“If I had more time on my hands, I would sell the property now. If interest rates keep rising, I could soon be at a loss, and if there is a recession and house prices fall off a cliff I could also lose out on the capital growth.”

Mr O’Dell is an accidental landlord who agreed a “consent to let” on his home in Nottinghamshire with his lender when his job took him overseas.

Because he has a consent to let, rather than a buy-to-let mortgage, Mr O’Dell cannot get a fixed-rate deal. This means his mortgage bill is likely to increase every time the Bank of England increases the Bank Rate.

Buy-to-let investors on standard variable rate deals will see the biggest drops in their profits as interest rates continue to climb.

Angus Stewart, of online buy-to-let broker Property Master, said the average rate for a two-year fixed rate loan of £160,000 with a 40pc deposit would cost a landlord £395 per month. “The same mortgage but on a variable rate was £661.” This is a jump of 67pc.

Landlords on SVR already have much smaller profit margins, meaning their business models are more vulnerable to rate rises.

Nick Mendes, of John Charcol mortgage brokers, noted the contrast between a fixed-rate deal and an SVR deal with one mainstream lender. For a landlord buying a £275,000 property with a 25pc deposit with a five-year fix, the rate is 2.78pc, meaning monthly repayments of £477.81. To borrow the same amount on the lender’s SVR deal, the rate is 4.49pc, meaning monthly repayments of £771.

“This is an increase of £324 per month and a reduction in net profit [assuming the house lets for £1,200 per month] of £294, before considering management fees etc,” said Mr Mendes.

Mr O’Dell added that soaring inflation and energy bills mean he is unable to raise the rent to offset his increased costs.

“I just tried to raise the rent for the first time in five years. I was only hoping to increase it by £40 per month, but I was hit by a bit of a barrage from my tenant and the answer was no. With the rising cost of living, it is very difficult to increase the rent without losing a tenant.”

Chris Sykes, of mortgage brokers Private Finance, said the rate rises, coupled with the Government’s plans to introduce new tenant protections, is putting the landlord business model at risk.

“I have seen several accidental landlords leave the market because it is no longer profitable and they are worried about about further rate rises eating away at their already slim margins once taxes are taken,” said Mr Sykes.

*This person’s name has been changed

Sign up to the Front Page newsletter for free: Your essential guide to the day’s agenda from The Telegraph – direct to your inbox seven days a week.

News Related

OTHER NEWS

Alabama Barker gives thanks for 'prayers and love' after her father Travis Barker is 'hospitalized for pancreatitis': 'I appreciate you & love all of you'

Barker, 46, was 'hospitalized for pancreatitis' after undergoing colonoscopy, it has been claimed His daughter Alabama, 16, took to Instagram Stories writing, 'Thank you guys for all of the prayers and love'  The Blink-182 drummer remains in hospital in Los Angeles, where Kourtney, 43, is by his side According to TMZ, doctors believe a recent colonoscopy 'triggered' the 46-year-old's condition The procedure only causes pancreatitis in 'very rare' cases; it can also be caused by gallstones or chronic, heavy alcohol use and usually requires hospitalizationPancreatitis is an inflammation of the pancreas, an organ that sits behind the lower part of the stomachSymptoms include upper abdominal pain, nausea, and vomiting, and can start suddenly and last for days Read more »

Guy Sebastian's manager is found GUILTY of embezzling his celebrity client's money by a jury - after trial that was hit with crisis after crisis including the judge dying

Guy Sebastian's former manager  Titus Day was accused of ripping of pop starCharged with embezzling him out of almost $900,000 between 2013 and 2020NSW District Court judge ordered jury to find him not guilty of three countsJury considered 47 other embezzlement charges this week when trial wraps up Read more »

Cammy Devlin targets World Cup spot as Hearts midfielder looks to earn Australia call with Europa League surge

Cammy Devlin hopes his Hearts form between now and November can see his World Cup dream come true. The Australian headed home during the summer for the first time since ... Read more »

Samantha Hankey: ‘People tell me I don’t look like an opera singer’

© Andrew Crowley Role reversal: the New Englander, 30, is set to appear as Ruggiero in ‘Alcina’ – Andrew Crowley “I really love playing pants roles,” says Samantha Hankey. “Or ... Read more »

TV tonight: cyber terror in Simon Pegg drama The Undeclared War

The Undeclared War 9pm, Channel 4 If the recent publicity stunt for this thriller gave you a scare – a fake emergency news broadcast about an imminent cyber-attack, inspired by ... Read more »

‘Our only livelihood’: Zimbabwean fishing communities fear for future as stocks dwindle

On a stool on a fishing rig floating near the shore of Lake Kariba, a woman is furiously scraping off the scales from a fish. Eyes bloodshot after a night ... Read more »

Jayden Richardson takes Aberdeen inspiration from Calvin Ramsay transfer as he admits 'I have big shoes to fill'

Jayden Richardson looked on as Calvin Ramsay earned his big move to Liverpool. Now Aberdeen’s new right-back hopes to fill his boots at Pittodrie. The 21-year-old signed a three-year contract ... Read more »

Dollar Down Despite Central Banks’ Hawkish Comments to Tame Inflation

© Reuters Dollar Down Despite Central Banks’ Hawkish Comments to Tame Inflation By Zhang Mengying Investing.com – The dollar was down on Thursday morning in Asia, after central bank chiefs ... Read more »

Video: 'High on meth' driver of doomed Texas tractor-trailer faces DEATH PENALTY alongside newly arrested fourth co-conspirator after 53 migrants died of heat stroke in the vehicle's trailer

Read more »

Video: Driver who almost died after crashing her car off a bridge and plunging into the water is mortified when she's sent the BILL to repair it

Read more »

Video: Why these sneaky hi-tech SUVs are a driver's WORST nightmare - and they may be coming to an area near you  

Read more »

Why these sneaky hi-tech SUVs are a driver's WORST nightmare - and they may be coming to an area near you

A seaside Sydney council has joined the hi-tech war on illegally parked carsResidents have spotted a covert car replacing traditional parking rangersThe car can hand out fines automatically and is said to be a great revenue raiser Automatic Number Plate Recognition software will spot offenders with precision Read more »

Neighbours veterans Stefan Dennis and Jackie Woodburne BLAST Logies Awards for its lacklustre tribute to the beloved soap: '40 seconds, f**k off'

Neighbours biggest stars Stefan Dennis and Jackie Woodburne have joined a chorus of actors from the beloved soap blasting the Logie Awards for its lacklustre tribute to the show at this ... Read more »

Australian bank collapses with thousands of customers told to withdraw funds IMMEDIATELY before it closes all accounts on Tuesday

Volt Bank announced it was closing its deposit taking business on WednesdayThe 140 staff will be left without a job once business shuts next TuesdayCustomers of the neobank have been urged to transfer their funds by July 5  Neobanks operate exclusively online without in-person branches  Read more »

Top bureaucrat known for her 'Jesus' management style tells why she took her colleague's $500k 'dream job' in New York City off her and gave it to a politician - as HER jaw-dropping taxpayer funded salary is revealed

Investment NSW CEO Amy Brown said she bases her management style on JesusMs Brown took part in an inquiry on Wednesday regarding a New York job offer In August 2021, Jenny West was offered a $500,000 trade post job in New YorkIn October that year, John Barilaro changed the recruitment process for the jobMs West's job offer was retracted and the position was then given to Mr Barilaro  Read more »

Sheffield Wednesday set to challenge Portsmouth in race for Swansea City's Scotland under-21 forward

Sheffield Wednesday are prepared to challenge Portsmouth in the race to sign Swansea City forward Kyle Joseph. The Owls suffered a major setback in their quest to sign Hull City’s ... Read more »

GP exodus will leave a quarter of posts empty within a decade

© Provided by The Telegraph Doctors The exodus of general practitioners could mean a quarter of posts will be vacant within a decade, new analysis suggests. The Health Foundation think ... Read more »

Stealth inheritance tax grab now costs families £150,000 each

© Provided by The Telegraph Taxman inheritance tax thresholds Bereaved families are having to hand over an extra £154,400 to the Treasury because inheritance tax thresholds have been frozen for ... Read more »

Five-year-old Darlington boy runs 10k in memory of his best friend who died from rare brain tumour

A five-year-old boy has run 10k in memory of his best friend after she died from an inoperable brain tumour. Little Rowan Lyons lost his classmate Sophie Welburn, five, to ... Read more »

Former Clyde and Montrose star dusts down boots to make football return at East Kilbride Thistle

© Paul Thomson Jamie Longworth, Barry Russell, David Sinclair, David Gray and Liam McLaughlin are among the new recruits at EK Thistle East Kilbride Thistle new boy David Gray admits ... Read more »

Albion Rovers boss Brian Reid will use loan market to boost squad for new season

Albion Rovers boss Brian Reid says he will utilise the loan market to bolster his squad, and needs at least three or four new signings after the arrival of goalkeeper ... Read more »

"I'm told" – Journalist drops claim on "whispers" Arsenal could get transfer own back on Chelsea

Arsenal can’t compete financially with Chelsea for Raheem Sterling, according to transfer insider Dean Jones. Thomas Tuchel’s men are in pole position to sign the £200,000 per-week ace and Jones ... Read more »

Man City have reversed their academy problem to make Txiki Begiristain's job easier

Only a few years ago, Manchester City youngsters were leaving the club because they weren’t good enough for the first team. City have grown their operations at the City Football ... Read more »

Raphinha can continue to live up to Ronaldinho promise if he completes £55m Chelsea transfer

Ronaldinho was a generational talent. He was someone who could get the whole stadium on their feet with a simple touch of a football. For many, he put the “beautiful” ... Read more »

Drivers warned as all new electric car chargepoints must have ‘smart functions' from today

From today, June 30, all home and workplace electric car chargers are required to have certain smart charging functions. The new rules are intended to manage the strain on the ... Read more »

Rutherglen Glencairn boss relishing cup clash as he eyes fixture release day

Rutherglen Glencairn fans are eagerly awaiting the release of the West of Scotland Football League fixtures this week, but the club have their first competitive fixture in the diary for ... Read more »

Every player linked with Huddersfield Town transfers this summer from Joe Allen to James McAtee

© Tom Flathers/Manchester City FC via Getty Images James McAtee The summer transfer window means that a new flock of players will inevitably be linked with last season’s play-off finalists ... Read more »

Jamie Shaul makes Hull FC debut revelation as fullback looks back on 'proud' career

© Will Palmer/SWpix.com Jamie Shaul of Hull FC breaks against Warrington Wolves It was a cold spring afternoon when Jamie Shaul’s name first appeared on the Hull FC team sheet ... Read more »

Cadeyrn Neville is handed a shock start in Saturday's series opener against England... with the former rower to become Australia's oldest debutant in 23 YEARS at age of 33

Australia are to hand a shock start to former rower Cadeyrn Neville on Saturday In the series opener against England, coach Dave Rennie wants physical playersNeville, a former rower, will be the oldest Aussie debutant since back in 1999  Read more »

Former Miss World Australia Courtney Thorpe pictured for the first time since accusing her NRL star ex-husband Jarrod Wallace of infidelity

Former Miss World Austrarlia Courtney Thorpe has been pictured for the first time  since she accused her NRL star ex-husband Jarrod Wallace of infidelity. The mother-of-one, who announced her split ... Read more »

New York state set to pass a law that would make it illegal to carry a firearm into a place of business unless the owner puts up a sign explicitly saying guns are welcome

New York State will attempt to ban people from carrying firearms into places of business unless the owners put up a sign explicitly saying guns are welcomeBan will include government buildings, health facilities, places where children gather and public transportation – including the New York City subway system Guns will also be banned in 'sensitive places,' which also include polling places and educational institutions Guns will be prevented from being carried in private businesses unless the business owner explicitly allows themState lawmakers will meet in an emergency session on Thursday where the state's gun-licensing laws will be loosened to conform Supreme Court decision Six justices in the court's conservative majority ruled that it was unconstitutional to require law-abiding people to provide 'proper cause' or a kind of special need Democrat NY Gov Kathy Hochul has warned it would lead to more gun violence New York aims to keep as many gun regulations as possible while obeying courtRuling explicitly warned lawmakers they could not do anything that would bar guns from the entire island of Manhattan or describe it as a 'sensitive place' Read more »

Selena Gomez looks every bit the makeup mogul in a spliced blazer dress and heels at the launch of Rare Beauty's Kind Words lip collection in Santa Monica

Selena Gomez nailed business chic as she arrived to the launch of her brand Rare Beauty’s Kind Words lip collection in Santa Monica on Wednesday. The 29-year-old Disney Channel alum showed ... Read more »

Video: 'Part-time' premier Palaszczuk slaps down a reporter who dared to quiz her about 'bullies' in the Labor government - and does herself no favours by admitting WHY she dodged a press conference

Read more »

Boris Johnson news – live: PM rules out early election amid sinking poll numbers

LIVE – Updated at 06:04 Prime minister Boris Johnson has ruled out calling an early general election, amid polls showing dwindling support for the Conservative Party. An exclusive poll for ... Read more »

Record number of UK police forces are failing and need intensive help

© Provided by The Guardian Photograph: Radharc Images/Alamy A record six police forces are currently judged as failing so badly that they need special help, the Guardian can reveal, as ... Read more »

20 ways to eat more vegetables

1/21 SLIDES © Shutterstock 20 ways to eat more vegetables Everyone knows that vegetables are exceptionally good for you. In fact, they’re the only food that you can eat without ... Read more »

Driver who almost died after crashing her car off a bridge and plunging into the water is mortified when she's sent the BILL to repair it

Deb Maroney was almost killed in a car crash off Swansea bridge, NSW, in 2017She was driving in wet weather when her car slipped and launched off the bridgeTransport NSW's insurance company sent Ms Maroney a bill for repairs last weekInsurance company iCare have since revoked the $11,758.45 bridge repairs bill Read more »

Below Deck star Ashley Marti says she made more money in a few hours on OnlyFans than she did filming an ENTIRE season of the hit Bravo series

Controversial Below Deck Sailing Yacht stewardess Ashley Marti shocked fans of the series when she skipped the recent reunion episode. And it turns out that the 24-year-old has now swapped ... Read more »

Australians living in the United States are 'sickened' at Supreme Court's abortion ruling - with some even considering a move back home

Aussies both in the US and at home have shared their view over Roe v. WadeOne expat said the process by the Supreme Court was 'horrid' and 'dangerous' Another expressed their view that the US is now a 'less safe, less equal society'It comes as four of Australia's billionaires pledge to bankroll their American staff Read more »

Ray Liotta's daughter Karsen hits the red carpet for her late father at the premiere of the series Black Bird... along with Jacy Nittolo

Just over a month after his surprising passing, the daughter of Ray Liotta – Karsen Liotta – hit the red carpet in her father’s honor. The 23-year-old actress attended the ... Read more »