"The path for landlords remains uncertain, as many will be struggling to keep up with legislation, which can come at a financial cost and time drain to keep up with changes"
- Rachel Springall - Moneyfactscompare
Buy-to-let mortgage rates have fallen to their lowest levels since September 2022 and product choice has reached a record high, according to Moneyfactscompare.co.uk. Despite the improved market conditions, landlords continue to face financial pressures and the prospect of new tax reforms is creating further uncertainty.
Average two- and five-year fixed buy-to-let rates now stand at 4.88% and 5.21% respectively. Overall product availability, including both fixed and variable deals, has risen to 4,597 – the highest level recorded since electronic records began in November 2011. Five-year fixed deals remain more common than two-year products, with record volumes available at both 75% and 80% loan-to-value tiers.
“Landlords looking to refinance or entering the market may be encouraged to see that buy-to-let rates have dipped to their lowest levels since September 2022, both for either a two- or five-year fixed term,” said Rachel Springall, finance expert at Moneyfactscompare.co.uk. “Those landlords who locked into a fixed rate deal in 2023 and are due to refinance will find the average two-year fixed rate has fallen from 6.64% to 4.88%, and the rate has edged slightly lower than 5% since the start of June 2025 (4.98%). However, uncertainties on the path of interest rates, and the changes to mortgage interest tax relief embedded by April 2020, meant some landlords would have grabbed a five-year fixed deal for peace of mind. In September 2020, the average five-year fixed rate was 3.20%, but today the difference in rate is around 2% more, at 5.21%. The availability of buy-to-let products has climbed to a record-high, which includes options at the higher end of the loan-to-value spectrum where landlords only need to muster up a 20% deposit or equity.”
Springall highlighted that wider financial pressures remain. “The cost of finance is a fundamental part of becoming a landlord, as tax changes over the years have led to a more challenging situation for investors to hit desirable profit margins. The speculation on more changes to hit private landlords in the upcoming Budget will also lead to more concerns. Those who do not have buy-to-lets held in a limited company could get hit if National Insurance Contributions (NICs) are levied on pre-mortgage profits. Hamptons had previously estimated that a limited company would be the structure of choice for the next generation of investors. The growing number of set-ups will only escalate if the Government makes the NICs levy rumour a reality.”
Mounting pressure is also being reflected in repossession figures. “The mounting pressure on landlords is stark, as recent figures from UK Finance revealed buy-to-let mortgage repossessions are up by 11% year-on-year,” Springall explained. “Not only this, but there are growing reasons for landlords to seriously consider leaving the market, or to reduce their portfolio. A record 26% of landlords sold at least one property in 2024 while just 8% of landlords bought, according to a survey from the National Residential Landlords Association (NRLA).”
She added that landlords continue to navigate major legislative changes. “The path for landlords remains uncertain, as many will be struggling to keep up with legislation, which can come at a financial cost and time drain to keep up with changes. However, it doesn’t stop there, as many are waiting with bated breath on the decisions surrounding the Renters’ Rights Bill. One of the major areas here is the abolition of Section 21 ‘no-fault’ evictions, which will offer greater security to renters, because landlords will no longer be able to evict tenants without providing a reason.”
Springall also noted that new standards are on the horizon. “Another area being reviewed in the Renters’ Rights Bill, which will favour tenants, is the Decent Homes Standard, in which landlords will have to make sure that their rented property meets specific heat, safety and functionality requirements. However, since April 2020, landlords have been prohibited from letting properties with an EPC rating below E, so there would have already been progress to make the private rental sector (PRS) more energy-efficient, no doubt saving renters some cash on their energy bills as a result. New or existing landlords would be wise to seek advice to assess how any moves in the sector will impact them. If they want to exit the sector, they will need to understand the costs involved, which include any agent fees and Capital Gains Tax (CGT).”
Megan Eighteen, President of ARLA Propertymark (Assocation of Residential Letting Agents), said, "Landlords leaving the market is a continuous trend and is pushing up rents for tenants due to a growing supply and demand imbalance.
“Ultimately, it’s positive to see there is a glimmer of hope for those landlords looking to take out a buy-to-let mortgage as they become the most affordable they’ve been in years. However, successive governments have placed pressure on many other areas of a landlord's finances for decades, and with the news of yet another blow for investors due in the upcoming Budget, the future of the private rented sector is concerning.
“We need to value every part of our housing ecosystem, as the fundamental issue to tackle is the lack of homes for the nation. Many people rely on their rental home, and if we’re not careful in ensuring a healthy and sustainable mix of homes of all tenures, many could find it increasingly difficult and unaffordable when looking to move.”
