Propertymark, the professional body for property agents, has spoken out over what it describes as a "real concern" that more landlords will exit the buy to let (BTL) sector - and the borrowing cost data behind that warning makes for sobering reading.
The intervention follows a period in which BTL mortgage rates have remained structurally elevated relative to pre-2022 norms. Strip away the modest rate reductions seen through 2024 and 2025, and the underlying picture is still one of significantly higher financing costs for the average landlord.
What the Borrowing Cost Data Shows
The numbers are pointing to a sustained pressure point. Average two-year fixed BTL mortgage rates climbed above 6% at their 2023 peak, according to Moneyfacts data - up from below 2% during the pandemic low of 2021. That is a more than threefold increase in the cost of debt over roughly two years.
Year-on-year, the picture has improved modestly. Rates edged back toward the 5% range through 2024 as the Bank of England began its easing cycle. But compared to the conditions that underpinned much of the BTL expansion of the 2010s, current rates represent a fundamentally different operating environment. The gap between rental income and financing costs - the net yield landlords actually pocket after mortgage payments - has narrowed sharply for leveraged (mortgage-financed) investors.
Propertymark's concern is not abstract. The trend in landlord numbers has been downward. Separate data from HMRC shows the number of individual landlords declaring rental income peaked and has since been declining, a pattern that points to more exits than entries across the sector.
Why Landlord Exits Matter for Renters
Every landlord who sells up typically removes a property from the rental pool. The data shows this dynamic has been feeding a supply crunch that has driven rents to record highs across most of the UK. The Office for National Statistics (ONS) private rental index recorded year-on-year rent growth above 8% for much of 2023 and 2024 - a direct consequence, in part, of constrained supply.
Propertymark's latest comment puts the borrowing cost squeeze front and centre as a driver of that supply contraction. The trend is reinforced by wider policy pressure on landlords - including the phased removal of mortgage interest tax relief under Section 24, completed in 2020, which means higher-rate taxpayers can no longer offset mortgage interest against rental income in full.
The Wider Context for BTL Investors
The data shows two compounding forces at work: higher absolute borrowing costs, and a tax environment that makes those costs harder to absorb. For landlords on interest-only mortgages - the most common BTL structure - the combination has materially changed the arithmetic of property investment.
Propertymark's intervention signals that professional agents are observing this shift in real time, not just in the aggregate statistics. If the trend continues, the rental market faces a supply problem that higher rents alone cannot resolve.
For landlords approaching a fixed-rate expiry, you may wish to engage a broker early to compare available products across the market and model the impact of different rate scenarios on your net yield.
