Landlords and mortgages: what do we know?
Whenever you propose reform of private renting, the landlord lobby always says no, because “landlords couldn’t afford it”. Whether it’s asking landlords to cover the cost of letting agent fees, to apply for a licence, to charge controlled rents, or to pay tax on their loans, we’re asked to believe that they can’t afford it. Then they threaten to raise rents – as if rents haven’t already been outpacing inflation since the end of the recession.
This claim assumes that landlords are already paying large amounts of their revenue out again in costs. Some of them are, but we point out that the majority are not, because they don’t have a mortgage.
For example, an interest-only mortgage of £150,000 at 4% costs £6000 a year. Rent on the £200,000 property bought with that mortgage might get you £10,000. Two thirds of private rented properties have no mortgage, and thus have significantly lower costs and capacity to absorb new regulatory requirements.