For those locking in for five years, the trend is similar: average rates have fallen from 6.49% in September 2023 to 5.33% last year, and now sit at 5.21%.
While borrowing costs have reached their lowest point in three years and the range of available deals has expanded to record levels, landlords are still navigating a complex and shifting landscape.
In addition to adapting to recent tax and regulatory reforms, there’s growing speculation that Chancellor Rachel Reeves may introduce National Insurance charges on rental income—adding another layer of financial pressure.
Meanwhile, the upcoming Renters Rights Bill is set to reshape the legal framework. Once enacted, it will strengthen tenant protections by banning no-fault evictions and requiring landlords to meet stricter property standards.
Meanwhile, the upcoming Renters Rights Bill is set to reshape the legal framework. Once enacted, it will strengthen tenant protections by banning no-fault evictions and requiring landlords to meet stricter property standards.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “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.”
She noted that landlords who secured fixed-rate deals in 2023 and are now approaching refinancing will find today’s average two-year rate lower than what they originally locked in.
She said: “However,” she added, “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%.”
She added: “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.”