Remortgaging provides silver bullet for struggling landlords

Not only is the UK facing the worst cost of living crisis in 50 years, with a vast majority of households being hit by rising costs of fuel, energy and food. Landlords also have upcoming legislation changes to EPC energy efficiency ratings coming down the track.

After Rishi Sunak’s recent Spring Statement 2022, UK households will be focusing on balancing their own books, with many having to drastically adjust their spending to weather the storm this year is set to bring.

It’s very likely too, that the majority of landlords will also have to refocus outgoings – and spend money – on their existing properties and portfolios.

Soaring inflation and interest rates

The Bank of England recently increased its base interest rate to 0.75% as it battles to curb the rising 6.2% inflation which is now at the highest level seen in three decades.

However, it is likely not to end there.

Predictions see inflation rising to 8% in April and then moving to double digit levels by the autumn. This will be largely due to increased fuel costs triggered by Russia’s invasion of Ukraine and April’s soaring domestic energy prices beginning to bite.

These changes spell trouble for landlords who undoubtedly face a raft of higher costs across their investments.

Obtaining mortgage finance may prove more difficult, and landlords' mortgage repayments are certainly expected to sharply rise if they are not currently on a fixed rate. In addition, energy bills and insurance premiums are also being cited as areas affecting inflation and therefore likely to negatively affect property investment.
The anxiety of this cost of living crisis is evidently looming large over landlords as a recent study by GetGround showed. It found that landlords were ‘concerned or very concerned’ that rising inflation will adversely impact their ability to cover the costs of maintaining their property investments. But it doesn’t end there.

Predicted changes to EPC legislation

In addition, landlords will soon be required by law to improve their energy efficiency rating if it is C or below, meaning many will be facing huge bills to complete the property upgrades.

This creates a perfect storm for ageing stock that will require remedial work to meet the Government’s global carbon emission targets.

But it is not the easiest environment to operate in. Maintenance and repair businesses are facing a deepening skills crisis, surging material costs and problems in the supply chain mean that work can be disrupted and slowed.

Not only that, but the impact of affording the necessary EPC upgrades as well as having to temporarily re-house tenants could be hugely troubling for the entire rental sector, its landlords, and their tenants alike.

There is, however, some encouraging news. Rishi Sunak’s recent Spring Statement announced VAT relief for home energy efficiency retrofits, which includes upgrades to insulation, triple glazing and renewable energy generation.

This is undoubtedly encouraging for landlords and will take some of the sting out of the necessary work, but for some it won’t go far enough, and this is where brokers can be well placed to assist.

There’s never been a better time to remortgage

It’s clear there is a double whammy of pressures on landlords. However, there is a solution that can help alleviate this strain.

By remortgaging now, brokers can create cost savings in mortgage repayments, but also be presented with a vital opportunity to capital raise for any expected – and unexpected – EPC upgrade costs.

There’s a reason that 2022 has been coined the year of the remortgage, with more than half of portfolio landlords being expected to refinance this year.

For cases where there are large portfolios or even for cases where a landlord has been detrimentally impacted by adverse credit during the pandemic, working with a specialist can produce dividends.

A specialist will scan the entire market for you, helping you to navigate complex criteria, and provide you with access to exclusive or semi-exclusive buy-to-let products with the UK’s best specialist lenders.

Specialists can guide you, secure a new lower interest rate, but also work as a driving force for your case’s completion. And with the multiple pressures on brokers, this extra pair of hands can be a gamechanger.

There’s no doubt that 2022 is a year which will place enormous financial pressures on many, however through specialist lenders innovating helpful products; the collaboration of financial institutions and well-informed brokers, the burdens of this year can be mitigated for landlords.