The cost of living crisis is impacting everyone, including landlords. A new survey by the team here at Molo has found that the biggest worries for UK landlords going into 2024 relate to rising costs and the impact of these, as well as tenants being unable to pay their rent.
With this in mind, VP of Strategy at Molo, Mark Michaelides, has provided guidance for how landlords can combat these concerns, and stay on the right foot in 2024.
Top five landlord worries in 2024 and expert guidance on how to handle them:
Our survey asked landlords to select their top five worries for 2024, and we’ve ranked these based on the number of times each worry landed in a respondent’s top five. Below are the main concerns, and guidance on how to help reduce these worries:
1)
Mortgage payments and interest rates increasing
Nearly half (47%) of landlords surveyed said that mortgage rates going up is one of their top five worries for 2024, making this the most pressing issue for landlords in the UK. It’s also the main source of stress for landlords in Birmingham, with over half (54%) of Brummie landlords ranking increasing mortgage costs within their top five concerns for the new year.
Alongside this, landlords across the country are also concerned about interest rates increasing in 2024, with 45% of landlords selecting this within their top five worries. This is the biggest concern in London, with just under half (49%) of landlords in the capital city admitting rising interest rates are within their list of most pressing stressors for the year.
On how to deal with increasing costs, VP of Strategy, Mark Michaelides says, “It’s hard to tell what the buy-to-let mortgage market will look like in 2024, and for landlords looking to expand their portfolio or remortgage, this can be a little concerning. However, there are lots of mortgage deals available and some lenders are even announcing reduced rates. For example, at Molo, we reduced our buy-to-let mortgage rates by 0.80% (29/11/2023). Shopping around for a low price is key here, and using tools like a mortgage calculator can help you to compare deals and choose the right one for you.
“Saving a higher deposit prior to purchasing a buy-to-let can also help to bring down your monthly mortgage repayment figure, or if you already have a property, you could make over-payments on your mortgage in order to reduce your debt. It’s also a good time to take a look over your entire portfolio and check your mortgage has not moved onto a higher reversion rate.”
2)
Tenants unable to pay rent
Over two-fifths (44%) of landlords are worried about tenants being unable to pay rent as we head into the new year. One in six (15%) landlords voted this as their number one worry for 2024. Regionally, it’s the biggest concern in Manchester, with 59% of landlords in the city voting it within their top five worries for 2024.
These worries are perhaps rooted in experience. According to our research, 59% of landlords across the UK have seen an increase in late payments amidst the cost of living crisis (late 2021 to now).
On how landlords can support tenants during this time, Mark says, “Rising costs can be stressful for both tenants and landlords, but there are ways to effectively handle late payments without resorting to extreme measures, such as eviction or court proceedings.
“We’ve found that over half (54%) of UK landlords have set up payment plans to help tenants with late payments. A further 57% have also reduced the price of rent on a property to support tenants. It’s important to have honest conversations with your tenants, and if needed, work with them to come up with a solution that is best for both of you.”
3)
Change in tax laws
Coming in fourth is new tax laws, such as buy-to-let income tax rates and reduction of capital gains tax allowances, with over a third (36%) of landlords selecting this as one of their top five concerns.
VP of Strategy, Mark Michaelides explains, “The seemingly ever-changing tax landscape can feel difficult to navigate. With the recent changes, many landlords have seen their profits impacted.
“Making sure you’re claiming all deductible expenses can be a way to help reduce costs. For example, agent fees and costs involved with repairs to the property can be deducted from your overall rental income.”
4)
Cost of decorating and maintenance increasing
With 34% of landlords citing it as a main concern, worries about the cost of decorating and maintenance increasing is the fourth biggest concern for landlords this year.
“With almost all areas of life being impacted by inflation, it’s no surprise that landlords are also worried about repair and maintenance costs going up.” says Mark. “While this can be frustrating, there are a few simple steps you can take to keep within your budget.
“First, choose your decor wisely, and make sure you’re buying quality furnishings. Cheaper might sound better, but if you have to keep replacing furniture or goods over time, it will add up to more in the long run. Also, if issues are reported, act quickly. Not only will this keep you in favour with your tenants, but it also means the issues won’t be prolonged and allowed to get worse.
“Sorting repairs yourself can help to keep costs down, but if you do find yourself needing a tradesperson, make sure to do your research ahead of time and get several quotes so you can find the best price.”
5)
Landlord insurance prices increasing
UK landlords are also worried about their insurance prices increasing, with a further 34% citing this as a big worry for 2024.
On how to tackle this, Mark Michaelides says, “Landlord insurance covers a rental property against potential risks, including damage or theft. While the current financial climate means many landlords might be seeing a rise in their insurance premiums, it’s vital that any buy-to-let property is fully protected. It might mean paying a little extra every month, but this could prevent you from being hit with large unexpected repair costs further down the line.
“There are lots of landlord insurance providers out there, so it’s important to do your research and look around for the best deal. Keeping your property in good condition will also help keep insurance costs down, as this will reduce the likelihood of you needing to make a claim.”
Rank | Concern | % of landlords who say this is within their top five worries for 2024 |
1 | Mortgage payments increasing | 47% |
2 | Interest rate increases | 45% |
3 | Tenants unable to pay rent | 44% |
4 | Change in tax laws | 36% |
=5 | Cost of redecorating and maintenance increasing | 34% |
=5 | Landlord insurance prices increasing | 34% |
6 | Cost of having an agency manage the property | 32% |
=7 | Price of property decreasing | 31% |
=7 | Property market volatility | 31% |
8 | Changes in eviction laws | 28% |
=9 | Impact of Renters Reform Bill | 26% |
=9 | Changes in licensing requirements | 26% |
10 | EPC changes | 15% |
VP of Strategy, Mark Michaelides, at Molo says, “In order to get off on the right foot in 2024, landlords need to make sure they’re fully prepared for the year ahead.
“In particular, with the Rental Reform Bill being discussed in parliament, you need to be ready for the upcoming changes and should take steps to manage these proactively. It’s not too early to start thinking about how you might need to adapt to the changes. For example, do you need to review your portfolio, or will you be implementing a new pet policy?
“New landlords, or those looking to expand their portfolios, should look for areas with good rental yields to ensure they’re able to make a return on investment, even if costs continue to increase.
“In general, landlords should also focus on keeping their properties well-maintained, acting quickly with any issues, and keeping communication lines open with tenants to make sure both parties are happy as we head into the new year.”
Locations with highest rental yield
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Sources & Methodology
Data was taken from a survey of 253 UK landlords aged 18+. Survey was conducted in December 2023.
