A year ago, many landlords’ primary concern was what would be included in the Government’s long-awaited Renters (Reform) Bill. Today, with the Bank of England having raised interest rates by a further 0.5% to 5%, legislation pales into insignificance as landlords understandably ask the question, can I still afford to be a landlord?

The answer to that comes with a great deal of consideration in today’s market. When reflecting on the vast number of barriers landlords face as I have below, it’s easy to see why so many are considering an alternative future. With that said, 4.4 million households use the private rented sector in England and that number is rising, so there will always be a need for landlords. It’s just how long the majority can weather the storm.

Affordability of mortgages and rent 

Renters are facing record prices with rents growing at the fastest annual rate for more than a decade. According to the Office for National Statistics, private rents in the UK rose 4.8% in the year leading up to February 2023. Rightmove also reported that average asking rents in London have surpassed £2,500 per month for the first time.  There is no denying it, tenants have it tough right now.

However, in just nine months, landlords have seen average fixed mortgage deals more than treble. I spoke to one landlord this week whose fixed-term is due to end. He was previously paying £350 for his buy-to-let mortgage, his payments are about to increase to £1100, a rise that would be impossible for most tenants to swallow, leaving the landlord to consider whether to find new tenants that can meet that payment, or come to an agreement with his current tenants. 

I do feel that more landlords need to have this conversation with their tenants before serving a Section 21 notice on the assumption they won’t be able to afford an increase. I’ve spoken to some landlords who want to remain as landlords but in panic, are looking to serve notice and sell before even having the conversation with their tenants. Remember, tenants are feeling the pinch regardless of whether they move or stay put, and some may welcome the opportunity to negotiate a rise, regardless of how significant that may have to be, rather than try to find somewhere new which could end up costing even more. I recently spoke about the rise of Section 21 notices being served on BBC Radio 4 ‘You and Yours’. (33min 54)

For some landlords, having a rent that covers the mortgage payments in its entirety is the only option, particularly if they have no financial flexibility to cover some themselves until rates come down with inflation.

However, obtaining a new mortgage deal is also more challenging for landlords at the moment as affordability is typically measured by the interest coverage ratio (ICR) which often requires borrowers’ rental income to exceed the mortgage payment by 125% or even more for a higher-rate taxpayer. 


On top of the Government reducing mortgage interest relief to 20%, in April, the capital gains tax-free allowance was reduced from £12,300 to £6,000, which in April 2024 will halve to £3,000. This means landlords will need to pay more in capital gains tax when selling a property. Something that landlords who are considering exiting the market must also take into consideration.

I stand in full support of all landlords and industry bodies, such as the National Residential Landlords Association, who are calling for the reintroduction of mortgage interest relief in full and for housing benefit rates to be unlocked. There has to be immediate and greater support for the rental market before the housing crisis deepens.

Fixed-term tenancies 

As we know, under the Renters (Reform) Bill, fixed-term tenancies will be replaced by rolling tenancies. Tenants will be able to terminate these with just two months’ notice making it very challenging for landlords to plan their future. Whilst it could be argued that finding a new tenant in the current market of high demand would not be a problem, all the associated costs with finding a new tenant still remain.

Property improvements

On top of everything else, under government proposals, all new lets from April 2028 will need to meet a minimum energy performance rating of C, up from E as it stands today. For landlords with older properties these improvements could prove costly, but failing to meet the deadline comes with a fine of up to £30,000.

One final point I would like to add, is that despite landlords’ financial struggles, I do still advocate that opting to use a reputable letting agent to manage your property is worth its weight in gold, particularly in the current climate. On rental income of £1200 per month with a 12% fee, that’s £144, which is also tax deductible. Most agents will spend 12 hours a month managing a property which works out at £12 an hour. If landlords are not clued up on the current and incoming legislation, this could be the best money you ever spend.

Clearly, being a landlord today is not for the fainthearted, which is why we are seeing the rise in landlords choosing to sell. With that said, I was recently speaking to David Coughlin of The Landlord Sales agency who said that 75% of their agreed sales are to other landlords who are also keeping the existing tenants.

Whatever the political agenda, the fact remains that the buy-to-let market cannot function without private landlords, but The Treasury needs to offer the same support to buy-to-let as it has mortgage borrowers. Landlords also need confidence that the court system will work if they have a tenant who falls in arrears or causes anti-social behaviour.

Landlords do not want to evict good tenants, and sadly this is what we are seeing. Good, reliable tenants are being forced to leave their homes because buy-to-let, for many landlords, is no longer financially viable. The narrative must change, and we need an industry which supports both tenants and landlords so that tenants have access to safe, good quality homes provided by people who are incentivised to remain in the market and act in a professional manner.

Paul Shamplina is founder of Landlord Action, Chief Commercial Officer at Hamilton Fraser, and is on Channel 5’s ‘Nightmare Tenants, Slum Landlords’ *

The Property Investor Show takes place at Lnndon Excel, 6/7 October 2023 – www.propertyinvestor.co.uk