Interest Rate Rises and the Great Landlord Sell Up




As Interest rates rose a half a percent yesterday, I fully expect a race to sell properties during these ‘unprecedented’ times.

Why are they unprecendented when we’ve had higher interest rates before ?

Because before, we didn’t have Section 24. And even though Section 24 came in 5 years ago, the true effects are only just being felt now.

So if you’re a 40% tax payer, and the rent is £1,000 and your mortgage is £400 a month, it means the following approx calculation

  • rent £1,000
  • less 40% tax (£400)
  • less mortgage (£400)
  • less service charge, voids, repairs – (£100 to £200 per month)

Which basically means break even.

(Obviously it’s not as straight forward as that, but as an approximate idea as to what we’re up against)

Now … increase interest rates – it doesnt mean the landlord makes less profit – they make the same profit – even though their costs have risedn.

In no other BUSINESS does that take place, only in rental properties

And because of that, you’re going to find a rush of landlords selling up, evicting tenants, making less rental properties available which in turn means even higher rents for tenants.

The one thing that surprises me is the total lack of acknowledgement from the government who simoply do not realise the impact this will have on both homeowners and tenants.

While they’re battling to be Prime Minister on TV, offering tax cuts they cant afford, the BoE is making life incredibly hard for tenants and homeowners alike.

The sheer disconnect of these polticians is staggering.

And it’s only going to get worse for both homeowners and tenants for the rest of 2022.

About the author, Daniel Latto

Daniel Latto is the owner and Director of The Daniel Latto Group, a Full Service Digital Marketing Agency.

Daniel advises businesses on marketing on Social Media using both Paid and Organic content. His top rated iTunes Podcast; 'The Wealth Creation Show' has hundreds of thousands of listeners around the world.

Daniel originally became Financially Free through property, with a Multi Million Pound Property porftolfio in Leeds.

He now lives in Spain on the shores of the Mediterranean.

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