UK buy to let landlords are currently navigating a steady, but still somewhat complex, mortgage market. This update explores the latest movements in mortgage rates, lender pricing activity, landlord sentiment, and how different tenancy types can impact your mortgage options.
SWAP Rates: A Slight Uptick, But Stability Prevails
Despite hopes for a dip, SWAP Rates have nudged slightly upwards over the last few weeks. Two-year swaps now sit at 3.7% (up from 3.6% last month), while five-year swaps are at 3.77% (up from 3.66% last month). Year-on-year, these figures remain broadly unchanged.
>> For more information on SWAP rates, click here.
The recent Base Rate cut of 0.25% was already priced into SWAP rates, meaning fixed-rate mortgage products have remained stable. Unless we see major shifts, such as falling inflation or easing geopolitical tensions, rates are unlikely to move significantly in the short term.
Lender Pricing: Minor Adjustments, Mostly Downward
The lack of real change to SWAP rates means lender activity has been relatively quiet, with only minor tweaks to pricing. While a few lenders have increased rates slightly due to funding costs, the overall trend has been downward.
Here’s a snapshot of current pricing (based on a £240,000 loan at 75% LTV):
Personal Buy to Let Mortgages:
- 2-year fixed: from 4.09% with a £1,500 fee
- 5-year fixed: from 3.87% with a £4,000 fee
- Tracker: from 4.64% with a £995 fee
Limited Company Mortgages:
- 2-year fixed: from 4.89% with a £1,499 fee
- 5-year fixed: from 4.8% with a £2,400 fee
- Tracker: from 5.8% with a £999 fee
On average, Limited Company rates are around 1% higher than personal rates. However, tax considerations may still make the Limited Company route more attractive for some landlords.
>> Explore the rates you could access here.
Landlord Sentiment: Resilient but Cautious
The latest report from The Mortgage Works shows that landlord confidence remains steady. While expectations for capital gains and business growth have dipped slightly, rental yield optimism has increased by 1%.
Key findings:
- 38% of landlords plan to sell at least one property in the next year
- Only 6% plan to buy, indicating a cautious approach
- 69% of landlords intend to raise rents in the next 12 months, albeit at a slower pace
This data suggests that while many landlords are consolidating, others, particularly larger portfolio holders, are preparing to invest more aggressively, seeing current conditions as a strategic opportunity.
Tenancy Types: What Lenders Like (and Don’t)
Understanding tenancy types is essential when applying for a mortgage. While standard ASTs (Assured Shorthold Tenancies) are widely accepted, more specialised arrangements can affect lender decisions.
Short-term accommodation
Some lenders accept short-term lets, including Airbnbs and serviced accommodation, but many will assess affordability based on standard AST income, which is typically lower. Specialist lenders like Cumberland Building Society may use actual holiday let income, offering more flexibility for landlords with seasonal properties.
Corporate lets
Housing associations and corporate lets offer guaranteed rent and long-term agreements, but many lenders view them as higher risk due to repossession concerns. Lenders like Paragon are more comfortable with these arrangements, particularly when the lease terms and tenant profiles are clearly defined.
Letting to vulnerable tenants
Some lenders may be cautious about properties let to vulnerable tenants, such as tenants with disabilities, mental health issues, or asylum seekers, due to potential reputational risks. While some exceptions exist, most lenders tend to favour arrangements that offer greater clarity and fewer complications in the event of repossession.
The threat of the Renters’ Rights Bill
As for the Renters Reform Bill and the proposed abolishment of ASTs, lenders currently see no material impact on tenant behaviour or mortgage risk. Most tenants prefer long-term stability, and lenders expect this trend to continue under fixed-term contracts.
Speak to an expert
Whether you're refinancing, expanding your portfolio, or exploring new tenancy models, our expert brokers can help you find the best solutions. Call us on 0345 345 6788 or submit an enquiry here.
