The arrangement fees charged by buy-to-let mortgage brokers “border on profiteering” one broker claims.

1. What’s the main issue? Lenders are charging super high arrangement fees on buy-to-let mortgages. These are fees landlords need to pay up front to set up their mortgages. Many people in the property industry think these fees are just way too high and are like ripping off landlords.

2. How high are these fees? So high that some people have called it “daylight robbery”. Imagine you want to borrow money to buy a house to rent out. The lender tells you that just to set up the loan, you need to pay them 7% of the amount you’re borrowing. So, if you’re borrowing £350,000, you’d need to cough up £24,500 just in fees!

3. Why have these fees gone up? These high fees started creeping in after some changes in the Budget last autumn. The Budget had an impact on something called “swap rates”, leading lenders to charge high product fees on buy-to-let mortgages.

4. What do the experts say?

• Kundan Bhaduri from The Kushman Group said landlords are getting hit hard with these crazy fees and it’s been an issue since the “Truss era”.
• Amit Patel from Trinity Finance highlighted the issue with a story of a shocked client who compared these fees to “daylight robbery”.
• Elliott Culley from Switch Mortgage Finance pointed out that while these high fees might give landlords a better mortgage rate, the fees are so high that many landlords just can’t afford them. And if they try to roll the fees into the loan, that causes even more problems.
• Riz Malik from R3 Mortgages used a colourful phrase, saying the fees could “make your eyes water”!

5. Is there another side to the story? Yes, some experts think these high fees are necessary. Here’s why:

• Justin Moy from EHF Mortgages says that even though the fees are painful, having a lower monthly mortgage payment might be essential for landlords to keep their investments profitable.
• James Miles from The Mortgage Quarter argued that lenders are using these high fees as a tool. This tool helps landlords borrow money and also makes sure lenders are following rules set by regulators.
• Bob Singh from Chess Mortgages added that due to strict lending rules, these fees are a way for lenders to keep giving out loans but still act responsibly.

In a nutshell? Buy-to-let landlords are facing sky-high arrangement fees. While many are upset and find these fees excessive, some industry experts believe they might be a necessary evil in the current financial landscape.