40% of residential landlords with a mortgage, whether fixed, tracker, or discount, are due to renew their mortgage rate in the next seven months to one year, according to new research from The Mortgage Lender (TML).

The specialist lender conducted a survey among residential landlords to delve into the state and sentiment of the current market. While two fifths of landlords have their mortgage coming up for renewal this year, a further 41% are due to renew their mortgage in the following 2-3 years.

According to the research, the majority of landlords with a mortgage are currently on a 5-year fixed mortgage (42%), while 21% are on a 2-year fixed deals. 15% are on Standard Variable Rate (SVR) mortgages, and 8% are on a tracker mortgage, meaning that these mortgage borrowers tend to see an immediate change in their monthly payments if the Bank of England decides to change the base rate.

While mortgage rates have dropped from their peak, those needing to remortgage in the next year will very likely still have to pay more on their mortgage than they currently are or would have had to if they had taken out the same mortgage a few years ago. Of those landlords needing to renew their mortgage rate, they believe their monthly payments will increase by £615 on average.

To deal with higher monthly costs, 30% of landlords have said they plan to increase the rent of the property, 23% have already budgeted for an increase, while 14% said they would sell the property. A further 14% said they plan to convert the property into an HMO in order to secure better returns, and 13% are considering converting to a holiday let.

Chris Kirby, head of sales – Midlands, South & specialist distribution at The Mortgage Lender, said: “The Bank of England has been grappling with high inflation for well over a year now, introducing successive rate rises to drive it down to more manageable levels. Although they have had some success in achieving this, there is still a way to go. A rate cut could happen this year, though possibly not until the summer.

“With many due to remortgage this year, it’s important landlords speak to a broker to find the most suitable mortgage for them in order to maintain their property portfolios, particularly as costs of living challenges continue. Brokers can offer invaluable support and guidance to help provide a holistic view of what deals are most suitable for clients before they rush into any decisions.”