9:58 AM, 24th June 2025, About 5 months ago
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The buy to let mortgage sector has hit a new high for product availability climbing to a record 4,144 deals – the highest since November 2011.
According to Moneyfactscompare.co.uk, this surge is accompanied by a big drop in borrowing costs, with the average two-year fixed rate dipping below 5% for the first time since September 2022.
The data reveals a growing preference for longer-term borrowing, with five-year fixed deals outnumbering their two-year counterparts.
Both two- and five-year fixed rates have declined for four consecutive months, with the five-year average now at its lowest since October 2024.
This sustained reduction in rates, driven by falling swap rates that signal lender confidence in future market conditions, is creating an optimistic outlook for property investors.
Rachel Springall, a mortgage finance expert at Moneyfactscompare.co.uk, said: “Landlords searching for a new buy to let mortgage may be pleased to see a rise in product availability, with the choice of deals soaring to its highest point on record.
“Borrowers concerned about interest rates may also find it encouraging to see the average two-year fixed buy-to-let rate has fallen below 5% for the first time since September 2022 and both the two- and five-year fixed rates have fallen for the fourth consecutive month.”
She adds: “Landlords coming off a low-rate fixed deal and needing to refinance will see increasing rents as the easiest way to boost margins.”
However, she notes that while five-year rates are at a six-month low, their decline has been less pronounced than two-year rates over the past year.
And despite the positive developments, landlords still face challenges with government proposals mandating that rental properties achieve a minimum Energy Performance Certificate (EPC) rating of C by 2030.
That move poses a hurdle for landlords who are unable to fund the necessary EPC upgrades.
Ms Springall said: “This is why a buy to let investment might not work for accidental landlords who are not able to fork out the costs to make renovations.”
Other issues include the upcoming Renters’ Right Bill, expected in late 2025 or 2026, which will introduce significant changes.
They include the abolition of section 21 ‘no-fault’ evictions and fixed-term tenancies, alongside new regulations on rent increases.
While the reforms aim to enhance tenant security, they may push some landlords to exit the market, Ms Springall says.
She added: “Seeking advice before buying any property, such as the workings of setting up a limited company is essential.”
For new investors, additional costs like the 5% Stamp Duty Land Tax surcharge and the risks of property price fluctuations or tenant shortages underscore the need for careful planning.
Ms Springall also recommends exploring diverse locations beyond major cities to maximise returns, while stressing the importance of understanding long-term profitability and tax implications when selling rented properties.
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