Buy-to-let mortgage rates fall as landlords lose tax relief

Written on 10 February 2020 by Giles Cook in Property News

Research by has revealed that average rates for fixed two and five-year buy-to-let mortgages have fallen by more than a quarter of a percent year-on-year.

The data shows average rates for a two year, fixed-rate, buy-to-let mortgage at 2.75%, down from 3.07% a year ago, and average rates for a five-year product at 3.20%, down from 3.56% in 2019.

Rachel Springall, finance expert at, said: “It’s encouraging to see that, despite economic pressures, the buy-to-let market is expected to grow in 2020. Lenders have cut rates on both short-term and long-term deals by around 0.30% year-on-year.”

The fall in rates could be good news for landlords able to switch their deal. It could also bring a boost following changes to mortgage interest tax relief. Since 2017, this relief, which allowed buy-to-let landlords to deduct mortgage expenses from rental income, has been phased out. This April will see the tax relief fall to zero, meaning higher tax bills cutting into many landlords’ profits.

According to Rachel Springall: “This shake-up may deter potential landlords who feel their profit margins will be tightened, but despite this, optimism for 2020 appears resilient and lenders are clearly working hard to entice prospective borrowers.

“Landlords who are looking to switch their deal could save a decent amount on loan payments each month, due to the fall in interest rates. In fact, if a landlord had a five-year fixed rate mortgage in 2015 and was looking to refinance, the average rate has dropped by a staggering 1.19%.”

Landlords may also be able to reduce losses by setting up a limited company – as the tax relief cut only applies to private landlords. However, there are other taxes and business costs to consider, so it is advisable to take independent advice.

Read more about this story on the website.

Giles Cook

Giles recently joined Best Gapp in 2017 as Partner Designate and Head of Residential Agency, bringing over 20 years’ experience to the firm. Following a three-year stint as an Area Director for Foxtons, he went on to head up Chestertons’ sales and lettings operations in central London, before becoming a Partner at top Knightsbridge boutique WA Ellis.

All articles by Giles Cook


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