New data from mortgage insight platform Dashly shows that landlords in London renewing their mortgage in the autumn and spring will be £6,384 worse off each year on average.
Based on a sample of 1,000 London BTL mortgages with initial rates expiring between 23rd September and 24th April — assuming borrowers switch to the best available rate instead of holding onto their standard variable rate — Dashly's analysis found that the average monthly mortgage payment for London landlords is set to rise from £662 to £1,194 as the remortgage crunch takes hold.
This reflects an increase of £532 compared to the current average deal secured during a period of low rates.
This works out at an average increase of £6,384 per year, equating to an 80% rise.
According to Dashly, the average BTL mortgage rate will rise from 2.24% to 5.42%.
CEO at Dashly, Ross Boyd, said: “Millions are feeling the remortgage crunch but few, based on this evidence, are feeling it like London's landlords.”
Brokers and lettings agents confirmed the gravity of the situation, as Imran Khan, co-founder of PropertyLoop, commented: “London landlords are nearing crisis point.
“In my 20 years working in property I've never seen such a precarious landscape."
Kundan Bhaduri, director at The Kushman Group, added: “The current situation for most small landlords in London is like riding a unicycle on a tightrope over a pit of sharks.
“With most small landlords in the capital only having small savings to hand, it's hard to see how a major repossession crisis can be averted.
“The government and treasury in particular must step in immediately to stop the brutal treatment of the BTL mortgage sector."
Craig Fish, MD at Lodestone, said many landlords are giving up on the capital which will undoubtedly affect London house prices, stating: “The mass exodus will soon begin, which in turn will have a significant downward impact on property prices in London and the Southeast.
“Many of our professional landlord clients have now shifted their attention away from the capital to the Midlands and north of England where rental yields are more favourable.
“We are also witnessing a similar exodus in the lender community, with many high street lenders making changes that eliminate most landlord scenarios.
“This will result in only specialist BTL lenders remaining, with a focus on limited-company lending.”
Justin Moy, a broker at EHF Mortgages, agreed, concluding: “More and more smaller landlords will attempt to sell their way out of this rather than ride it out.
“London landlords are dammed if they stick, [and] dammed if they sell."
