Buy-to-let landlords are facing a fresh squeeze as mortgage rates rise sharply, product choice shrinks and regulatory costs loom.
Latest data from Moneyfacts shows average fixed rates have climbed steadily since the start of March, with 2-year deals now at their highest level in a year and 5-year fixes at a two-year peak.
The rise is already feeding through to borrowing costs. Landlords taking out a typical £250,000 loan over 25 years are now paying around £1,100 more per year compared to the start of the month.
At the same time, product availability has tightened significantly. The number of buy-to-let mortgage deals has fallen by around 1,300 since early March, with total choice dropping below 5,000 – a level last seen in November 2025.
MIDDLE EAST UNREST
The increase in borrowing costs comes against a backdrop of geopolitical instability, with unrest in the Middle East pushing up swap rates and driving repricing across the mortgage market.
Landlords are also bracing for further financial pressure from the Renters’ Rights Act, due to take effect in May, alongside upcoming energy efficiency requirements. Proposed rules could see landlords needing to spend up to £10,000 per property to reach an EPC rating of C by 2030.
PAIN FOR LANDLORDS
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, says: “Soaring borrowing costs will cause pain to landlords this year, as they join millions of consumers facing higher mortgage repayments.
“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.
“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.”
She added that landlords may also need to take on further borrowing to fund upgrades required under new standards, warning that “costs will escalate further” as energy efficiency rules tighten.
BALANCED APPROACH
Megan Eighteen (main picture, inset), President of ARLA Propertymark (Association of Residential Letting Agents), says: “Rising buy-to-let mortgage rates will place significant additional pressure on many landlords at a time when they are already grappling with substantial regulatory and cost burdens.
“Increased borrowing costs, combined with reduced product choice, risk undermining confidence in the sector and could ultimately restrict the supply of homes in the private rented market.”
RENTERS’ RIGHTS ACT
“With landlords also preparing for the introduction of the Renters’ Rights Act and facing potentially high costs to meet future EPC requirements, there is a real concern that some may reassess their position and exit the market altogether. This would exacerbate existing supply shortages and place further upward pressure on rents for tenants.
“It is essential that the cumulative impact of these changes is recognised. A balanced approach is needed to ensure improvements to housing standards can be delivered without discouraging investment or reducing the availability of much-needed rental homes.”
