Pressure on landlords takes shine off BTL rate cuts
Buy-to-let fixed rates dipped to their lowest points since September 2022, and choice rose to a record high, according to Moneyfactscompare.co.uk. However, landlords are facing financial challenges, and rumours of more tax reforms in the Budget could hit investors hard.
• Average buy-to-let fixed rates over two- or five-year have dipped to their lowest levels since September 2022. The average two- and five-year fixed rates stand at 4.88% and 5.21% respectively.
• Overall buy-to-let product availability (fixed and variable) rose to 4,597 deals, its highest count on our electronic records (November 2011). There are still more five-year fixed deals than two-year fixed deals. Deeper analysis of the loan-to-value tiers shows record volumes of deals at 80% and 75% LTVs, both for two- and five-year fixed options.
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“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. 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.
“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.
“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. 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).
“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.
“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).”
| Buy-to-let market analysis | |||||
| Product numbers | Sep-22 | Sep-23 | Sep-24 | Aug-25 | Sep-25 |
| BTL product count (fixed and variable) | 2,075 | 2,475 | 3,186 | 4,487 | 4,597 |
| Two-year fixed rate BTL all LTVs | 535 | 700 | 1,100 | 1,518 | 1,547 |
| Two-year fixed rate BTL at 60% LTV | 84 | 72 | 77 | 99 | 103 |
| Two-year fixed rate BTL at 75% LTV | 253 | 347 | 514 | 808 | 818 |
| Two-year fixed rate BTL at 80% LTV | 85 | 74 | 130 | 193 | 207 |
| Five-year fixed rate BTL all LTVs | 842 | 1,110 | 1,399 | 1,838 | 1,860 |
| Five-year fixed rate BTL at 60% LTV | 107 | 83 | 93 | 108 | 112 |
| Five-year fixed rate BTL at 75% LTV | 409 | 592 | 698 | 955 | 974 |
| Five-year fixed rate BTL at 80% LTV | 126 | 80 | 145 | 231 | 246 |
| Average rates | Sep-22 | Sep-23 | Sep-24 | Aug-25 | Sep-25 |
| Two-year fixed rate BTL all LTVs | 4.47% | 6.64% | 5.35% | 4.91% | 4.88% |
| Two-year fixed rate BTL at 60% LTV | 3.69% | 6.48% | 4.86% | 4.35% | 4.31% |
| Two-year fixed rate BTL at 75% LTV | 4.46% | 6.64% | 5.37% | 4.88% | 4.87% |
| Two-year fixed rate BTL at 80% LTV | 5.00% | 7.30% | 6.08% | 5.58% | 5.54% |
| Five-year fixed rate BTL all LTVs | 4.72% | 6.49% | 5.33% | 5.23% | 5.21% |
| Five-year fixed rate BTL at 60% LTV | 3.87% | 5.95% | 4.65% | 4.43% | 4.43% |
| Five-year fixed rate BTL at 75% LTV | 4.76% | 6.57% | 5.38% | 5.27% | 5.24% |
| Five-year fixed rate BTL at 80% LTV | 5.28% | 7.09% | 6.01% | 5.70% | 5.67% |
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