Buy-to-let rates fall as landlords brace for Budget - London Wallet

Buy-to-let fixed rates stand at their lowest since the start of September 2022, according to the latest analysis by Moneyfactscompare. But today’s Budget could reveal tax raids on landlords.

Average fixed rates over two- or five-year fixed terms fell month-on-month and have remained below 6% since the start of 2024. These rates sit at their lowest levels since the start of September 2022, before the fiscal announcement.

Overall buy-to-let product availability (fixed and variable) rose month-on-month. Product choice is greater year-on-year, and is at its highest level for over two years (June 2022 – 3,484). Deeper analysis shows a month-on-month rise of 40 five-year fixed deals, and a rise of 47 two-year fixed deals.

Buy-to-let market analysis
Product numbers	Oct-22	Oct-23	Apr-24	Sep-24	Oct-24
BTL product count (fixed and variable)	988	2,581	2,883	3,186	3,277
Two-year fixed rate BTL all LTVs	183	773	947	1,100	1,147
Two-year fixed rate BTL at 60% LTV	35	67	72	77	86
Two-year fixed rate BTL at 75% LTV	84	379	398	514	556
Two-year fixed rate BTL at 80% LTV	28	97	136	130	150
Five-year fixed rate BTL all LTVs	375	1,136	1,270	1,399	1,439
Five-year fixed rate BTL at 60% LTV	36	81	81	93	92
Five-year fixed rate BTL at 75% LTV	197	613	574	698	742
Five-year fixed rate BTL at 80% LTV	52	85	141	145	162
Average rates	Oct-22	Oct-23	Apr-24	Sep-24	Oct-24
Two-year fixed rate BTL all LTVs	5.57%	6.40%	5.52%	5.35%	5.24%
Two-year fixed rate BTL at 60% LTV	4.52%	6.09%	5.21%	4.86%	4.67%
Two-year fixed rate BTL at 75% LTV	5.41%	6.40%	5.56%	5.37%	5.25%
Two-year fixed rate BTL at 80% LTV	6.74%	6.95%	6.22%	6.08%	5.88%
Five-year fixed rate BTL all LTVs	6.05%	6.32%	5.52%	5.33%	5.24%
Five-year fixed rate BTL at 60% LTV	4.26%	5.70%	4.81%	4.65%	4.45%
Five-year fixed rate BTL at 75% LTV	6.04%	6.36%	5.54%	5.38%	5.29%
Five-year fixed rate BTL at 80% LTV	7.10%	6.84%	6.19%	6.01%	5.85%
Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfactscompare.co.uk

Rachel Springall, finance commentator at Moneyfactscompare.co.uk, said: “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. There are also many more deals for borrowers to choose from, as lenders have been adjusting their ranges to accommodate demand. These are positive signs for prospective landlords, but there are numerous other factors to consider before taking the leap into the buy-to-let sector, not just the cost of a mortgage. The margin of profit from rental income may well be tighter than expected, but property is still regarded as a safe long-term investment.

“The tax changes which have impacted the buy-to-let market have resulted in droves of landlords setting up limited companies to manage their portfolios. The number of limited companies set up between January and September this year was 23% higher year-on-year and 70% of new buy-to-let purchases in England and Wales are now made using a limited company, according to Hamptons estate agents. However, landlords could reach breaking point if stamp duty relief is unwound as planned next year and those facing dwindling profits may sell up, leading to a mass exodus. There may then be a flood of sales, during a window of opportunity, to avoid paying a potential rate hike of capital gains tax (CGT).

“Landlords will be on tenterhooks to see how the upcoming Budget will play out and lenders may remain fluid with their fixed rate pricing over the next few weeks, particularly due to volatility surrounding swap rates. Any borrowers concerned about their present situation would be wise to seek independent advice if they need support or indeed to navigate the latest deals if they are due to refinance in the next few months.”