"Soaring borrowing costs will cause pain to landlords this year, as they join millions of consumers facing higher mortgage repayments"
- Rachel Springall - Moneyfactscompare
Buy-to-let mortgage rates are rising sharply, pushing up borrowing costs for UK landlords and adding fresh pressure to UK property investment returns.
New data from Moneyfactscompare.co.uk shows fixed rates on buy-to-let mortgages have increased since the start of March 2026, driven in part by market instability linked to unrest in the Middle East. The shift is already affecting mortgage affordability, with landlords facing higher repayments alongside tightening regulation and falling product choice.
Average two-year fixed buy-to-let mortgage rates have reached their highest level in a year at 5.40%, while five-year fixes have climbed to 5.91%, the highest level in two years. For landlords refinancing or purchasing new properties, the cost impact is immediate.
Borrowers taking out a two-year fixed deal now face annual repayments around £1,100 higher compared with the start of March, based on a £250,000 loan over a 25-year term.
At the same time, product availability has contracted sharply. The total number of buy-to-let mortgage deals, including fixed and variable options, has dropped by around 1,300 since early March. Overall choice has fallen below 5,000 products for the first time since November 2025.
Impact on buy-to-let investors
Higher buy-to-let mortgage rates are likely to weigh heavily on landlord profitability, particularly for those with leveraged portfolios or approaching refinancing.
Increased borrowing costs could lead to:
- reduced rental yields as mortgage payments rise
- upward pressure on rents as landlords pass on costs
- portfolio restructuring or property sales
- tighter mortgage affordability assessments from lenders
The wider concern is that rising costs may reduce the supply of rental homes across the UK property market, particularly if smaller landlords exit.
What the data means for landlords
Alongside rising buy-to-let mortgage rates, landlords are preparing for significant regulatory changes that will further increase costs.
The Renters’ Rights Bill is due to come into force in May 2026, introducing new standards across the private rented sector. Landlords will also need to meet stricter energy efficiency targets, with properties required to reach an EPC rating of C by October 2030.
This could require an investment of up to £10,000 per property, depending on its current condition and value.
Rising costs and regulatory pressure
“Soaring borrowing costs will cause pain to landlords this year, as they join millions of consumers facing higher mortgage repayments," comments Rachel Springall, finance expert at Moneyfactscompare.co.uk. "This is terrible news, as rising costs could lead to higher rental payments for tenants, or a drop in the pool of properties available for rent if landlords decide enough is enough and sell off their portfolio."
"The unrest in the Middle East has caused absolute mayhem in the residential mortgage market, buy-to-let rates are also being hiked, and hundreds of deals have been pulled from sale."
“The positive sentiment entering 2026 has been shattered,” she said. “And landlords not only have to face higher borrowing costs, but also prepare themselves for the Renters’ Rights Bill, which comes into effect at the start of May 2026."
"Those who were to take out a mortgage now, compared to the start of this month, will face higher repayments of £1,100 more a year. This is based on a borrowing of £250,000, over 25 years at 5.29%, versus 4.66% at the start of March 2026.”
She added: “It is entirely possible that landlords may have to take on an additional loan this year to cover refurbishment costs, to ensure they abide by the Decent Homes Standard, which is set out in the Renters’ Rights Bill, again coming into force this May."
"It is of course essential that tenants feel safe and secure in their homes, and it will be ever more essential to have a dwelling as energy-efficient as possible with rising costs expected this summer. Thankfully, lots of progress would have been made to make private lets more energy-efficient over the past six years, under the Minimum Energy Efficiency Standard (MEES) regulations, whereby landlords have been prohibited from letting properties with an EPC rating below E."
She concluded, "However, landlords’ costs will escalate further, as they are expected to invest up to £10,000 as a spending cap to reach an EPC rating of C by October 2030, subject to the value of a property. If that EPC rating is not achieved, landlords could face substantial fines, as the rules apply to all tenancies. Seeking advice will be essential for new or existing landlords to keep on top of the changing legislation and how rising costs and interest rate rises will hit their profit margins.”
