UK: Buy-to-Let Landlords Benefit from Declining Mortgage Rates

Discover how more than 40 lenders have slashed buy-to-let mortgage rates, providing relief for landlords amidst rising costs and a less favorable tax regime.

Buy-to-let landlords have been facing a tough time in recent years, with rising interest rates, increased costs, and a less favorable tax regime. The current falls in mortgage rates have caught the attention of landlords, as more than 40 lenders have cut their rates since the start of the year. While residential rates for home buyers have been in the spotlight, buy-to-let mortgage rates have also been on the decline.

Coventry Building Society has announced rate cuts for landlords, with their cheapest five-year fixed rates now starting from 4.44 per cent with a £1,995 fee attached. Other lenders such as Santander, Paragon Bank, and Accord Mortgages have also followed suit with rate cuts for buy-to-let mortgage. With over 2 million buy-to-let properties having a mortgage attached, many landlords are feeling the impact of higher mortgage rates on their profits.

The average two-year fixed rate buy-to-let mortgage is currently at 5.78 per cent, while the average five-year buy-to-let mortgage stands at 5.75 per cent. This means that landlords requiring a £200,000 interest-only mortgage on a five-year fix will need to pay £958 a month in mortgage costs. When factoring in other expenses such as periods of property vacancy, repairs, maintenance, letting agent fees, compliance checks, insurance, and service charges, it becomes clear that many landlords are heavily reliant on rising rents to turn a profit.

The recent falls in buy-to-let mortgage rates offer some relief to landlords who have been grappling with rising costs. However, it remains to be seen how these developments will impact the overall profitability of buy-to-let investments in the long run.