But landlords may soon face new tax burdens, finance expert says
Fixed mortgage rates for buy-to-let properties in the UK have fallen to their lowest levels since September 2022, according to recent analysis from price comparison site Moneyfactscompare.co.uk.
The data shows that average rates for both two- and five-year fixed buy-to-let mortgages have dipped month-on-month, staying below 6% since early 2024. This marks the lowest point for buy-to-let fixed rates in over a year, a sign of stability after a period of heightened volatility following recent years’ fiscal policies.
In addition to falling rates, the range of buy-to-let mortgage products available has increased, reaching its highest level since June 2022, when there were 3,484 options on the market. This includes a month-on-month rise of 40 five-year fixed deals and 47 two-year fixed deals, reflecting growing options for landlords seeking both fixed and variable rate products.
Rachel Springall (pictured), finance expert at Moneyfactscompare.co.uk, said that the recent trends could provide some relief to landlords after years of challenges in the buy-to-let sector.
“The buy-to-let market has had its fair share of challenges over the years, so landlords might find it encouraging to see fixed interest rates have been on the downward trend,” she noted, adding that lenders are also expanding their offerings to meet demand.
However, Springall cautioned that the financial landscape for landlords remains complex. While lower interest rates and expanded mortgage options are positive, other pressures — particularly around profit margins — persist.
“The margin of profit from rental income may well be tighter than expected, but property is still regarded as a safe long-term investment,” she said.
Tax changes have already led many landlords to shift their properties into limited companies, with recent data from Hamptons estate agents showing that 70% of new buy-to-let purchases in England and Wales are now made through limited companies. The number of buy-to-let limited companies created between January and September 2023 rose by 23% year-on-year.
Looking ahead, Springall warned that potential changes in the Budget could impact landlords further. Stamp duty relief is set to expire next year, and there is speculation around increases in capital gains tax (CGT), which could lead some landlords to exit the market to avoid higher taxes.
“Landlords will be on tenterhooks to see how the upcoming Budget will play out,” she said, noting that lenders may adjust fixed rate pricing depending on the direction of swap rates and market volatility.
With these potential tax hikes on the horizon, Springall advised landlords to consider seeking independent advice, especially those needing to refinance in the coming months.
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