More than three quarters of BTL portfolios financed by borrowing

  • 28/09/2023
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More than three quarters of BTL portfolios financed by borrowing
Around 78 per cent of the average buy-to-let portfolios in England and Wales are financed by borrowing, meaning higher mortgage rates are likely to impact property investors.

According to research from Octane Capital, this figure is highest in the East Midlands with 97 per cent of properties held with a loan.

This is followed by West Midlands and Wales where 89 per cent and 83 per cent of investment properties are financed with a mortgage.

The lender said that the higher levels of leverage could suggest that the buy-to-let market has the “greatest degree of vulnerability to landlords”, who could struggle to make the economics work during high interest rate period.

The firm continued that there could be a higher number of landlords leaving the sector in these areas.

Yorkshire and the Humber has the lowest proportion of properties held with a loan at 67 per cent, followed by South West and North West at 67 per cent and 70 per cent respectively.


‘A challenging storm to weather’

Octane Capital’s CEO Jonathan Samuels said: “The rising cost of mortgages has been a challenging storm for landlords to weather, and considering their reliance on mortgage finance it’s easy to see why.

“In much of the country the overwhelming majority of investment properties are held with a loan, meaning those landlords will have no choice but to raise rents to compensate for rising interest rates.”

He continued: “This is particularly the case in the East and West Midlands, where many will be feeling the pinch when they remortgage going forward.

“Investors in Yorkshire and the Humber are least affected, with a third of investment properties being owned outright, so some landlords should be shielded from the tougher market conditions.”

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