Pain for landlords as buy-to-let borrowing costs soar
Buy-to-let fixed mortgage rates are soaring due to unrest in the Middle East, according to Moneyfactscompare.co.uk. Landlords also face further financial challenges over the next few years, to meet new private rental rules.
- Average buy-to-let fixed rates over a two- or five-year term have risen since the start of March 2026. The two-year rate is at its highest level for a year (February 2025 – 5.40%), the five-year rate is at its highest level for two years (January 2024 – 5.91%).
- Borrowing costs for those who take a two-year fixed deal are now £1,100 higher, compared to the start of March 2026, based on a £250,000 loan, with a 25-year term.
- Overall buy-to-let product choice (fixed and variable) has fallen sharply, by around 1,300 deals since the start of March. Choice was last below 5,000 in November 2025.
- Landlords will be preparing for the Renters’ Right Act, which comes into force this May. In addition, they will be expected to invest up to £10,000 to reach an EPC rating of C by October 2030. Growing costs could dampen the profitability of buy-to-let.
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“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.
“The positive sentiment entering 2026 has been shattered, 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.
“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. 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.”
| Buy-to-let market analysis | |||||
| Product numbers | Mar-24 | Mar-25 | Sep-25 | Mar-26 | 26-Mar-2026 |
| BTL product count (fixed and variable) | 2,844 | 3,746 | 4,597 | 5,660 | 4,332 |
| BTL product count – 80% LTV | 334 | 426 | 523 | 643 | 489 |
| BTL product count – 75% LTV | 1261 | 1,773 | 2,082 | 2,416 | 1,743 |
| BTL product count – 60% LTV | 191 | 191 | 255 | 272 | 204 |
| Average rates | Mar-24 | Mar-25 | Sep-25 | Mar-26 | 26-Mar-2026 |
| Two-year fixed rate BTL all LTVs | 5.51% | 5.24% | 4.88% | 4.66% | 5.29% |
| Two-year fixed rate BTL at 60% LTV | 5.22% | 4.77% | 4.31% | 4.08% | 4.93% |
| Two-year fixed rate BTL at 75% LTV | 5.53% | 5.20% | 4.87% | 4.66% | 5.28% |
| Two-year fixed rate BTL at 80% LTV | 6.24% | 5.89% | 5.54% | 5.17% | 5.83% |
| Five-year fixed rate BTL all LTVs | 5.51% | 5.44% | 5.21% | 5.05% | 5.63% |
| Five-year fixed rate BTL at 60% LTV | 4.84% | 4.66% | 4.43% | 4.24% | 4.91% |
| Five-year fixed rate BTL at 75% LTV | 5.53% | 5.46% | 5.24% | 5.07% | 5.65% |
| Five-year fixed rate BTL at 80% LTV | 6.18% | 5.89% | 5.67% | 5.49% | 6.11% |
| Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfactscompare.co.uk | |||||
Megan Eighteen, President of ARLA Propertymark (Association of Residential Letting Agents), comments:
“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.
“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.”
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