Over the recent weeks Litigation Partner, Will Oakes has noticed an increase in landlords selling their rental properties due to their fixed-rate mortgages expiring or coming to an end.
As a result, many landlords have or are due to transition to a variable rate. After the fixed period, your mortgage usually converts to a variable interest rate. This means that your interest rate will now fluctuate based on market conditions and their monthly mortgage payments will consequently fluctuate.
Due to the interest rate increasing to 4.5% landlords are likely to be paying more even if they can secure another fixed-term period.
How does the interest rate affect buy-to-let mortgages?
The interest rate determines the cost of borrowing money. When interest rates are low, it generally becomes more affordable to borrow because the interest charges on loans are lower.
Equally, lower interest rates can increase the affordability of loans. With lower interest rates, monthly loan payments are typically reduced, making it easier for borrowers to manage their debt obligations. This can lead to increased borrowing activity, as more people are able to access credit and make purchases they might have otherwise delayed.
What is this important?
It’s an important development because the Government will be abolishing Section 21’s in England soon under the Renter’s Reform Bill. Instead, of issuing a Section 21’s also known as ‘no fault’ eviction notices, landlords will need to provide their tenants with a reason for ending a tenancy.
What is a Section 21?
Section 21 refers to a provision within the Housing Act 1988 in the United Kingdom that allows landlords to regain possession of their property from assured shorthold tenants. It is commonly known as a “Section 21 notice” or “no-fault eviction.”
Under Section 21, landlords can serve a notice to terminate the tenancy without providing a specific reason for doing so. This means that landlords can seek possession of the property at the end of the fixed term or during a periodic tenancy without needing to demonstrate any fault on the part of the tenant.
What is the Renter’s Reform Bill?
The Renter’s Reform Bill aims to make significant reforms to the private rented sector and improve the rights and protections for renters. Some of the proposed changes include:
- Ending “no-fault” evictions: The bill may seek to abolish Section 21 of the Housing Act 1988, which allows landlords to evict tenants without providing a specific reason.
- Increasing security of tenure: The bill may propose extending the minimum length of assured shorthold tenancies and providing more stability for renters.
- Rent controls: There have been discussions about potential rent control measures to limit rent increases and ensure affordability for tenants.
- Improving living conditions: The bill may introduce stricter standards for rental properties, addressing issues such as property maintenance, repairs, and safety.
Well as mentioned we have seen an increase in landlords selling their properties. If you would like to sell your buy-to-let properties due to the rising cost, you’ll need to unfortunately evict your tenants. To do this you’ll need a litigation solicitor. It goes without saying that Will Oakes would be happy to advise and support, you. He can also give advice to letting agents too.
Depending on the condition of the property you may which to sell via an estate agent on the open market or under auction conditions. At Attwells Solicitors we can assist you with both. Our Auction department can provide you with an auction sales pack and recommend auctioneers.
Equally, we have a large conveyancing department at your disposal. If you choose to sell your buy-to-let properties these will be undertaken by one conveyancer who you can communicate directly with.
Before selling, it’s important for landlords to consult with professionals such as estate agents, tax advisors, and solicitors to understand the legal and financial implications of the sale.
For more information, please call Will Oakes on 01206 239764 or click on the button below to receive a quote.