Concerns are growing about the effect of rising buy-to-let mortgage rates on rents in the private rented sector, with the ongoing Middle East conflict being linked to significant market turbulence in recent days.
According to Moneyfacts, 1,300 buy-to-let mortgage products have been pulled from the market since the end of March. The average rate on a two-year fixed buy-to-let mortgage rose from 4.66% in early March to 5.40%, while the average five-year fixed rate climbed from 5.05% to 5.72% over the same period.
One Moneyfacts expert warned of “soaring borrowing costs” causing “pain to landlords” and flagged the risk of higher rents following.
However, data from the TDS Charitable Foundation, which advances education about housing rights and obligations in the private rented sector, suggests the picture is more nuanced. A representative survey of over 2,000 private landlords in England found that nearly half are insulated from rate movements entirely.
49% said they funded their rental property without any borrowing in the past year, up sharply from 31% in 2024, meaning higher buy-to-let mortgage rates do not affect around half of all landlords.
The group most exposed is the 28% of landlords who fund their properties through interest-only buy-to-let mortgages. Because these landlords don’t reduce their loan balance through monthly payments, any rate increase raises the cost of the entire outstanding amount, directly squeezing cash flow and profitability.
Even so, mortgage costs were not the primary driver of rent increases last year. Among the 56% of landlords who raised rents over the previous 12 months, just 26% pointed to growing mortgage costs.
More commonly cited factors were increased property maintenance and running costs (49%), a desire to align rents with the local market (44%), and the broader rise in the cost of living (41%). The Foundation’s 2026 landlord survey will assess how, if at all, this has shifted.
Many landlords also appear reluctant to pass costs on to tenants. Of the 43% who had not raised rents, 52% cited concern about the cost of living for their tenants as a reason, with the same proportion saying they were prioritising keeping their current tenants in place.