For landlords on full repayment mortgages, the average monthly payment has increased from £695 to £1,031 — a rise of 48.4%, or £336 per month.
The steepest increase has been recorded among those using interest-only products, which remain widely used in the buy-to-let sector owing to their lower monthly outgoings and yield advantages. The average monthly cost of an interest-only buy-to-let mortgage has climbed from £381 to £625, a rise of 63.8% — an additional £243 each month. Across a standard two-year fixed term, landlords on interest-only deals are now paying an estimated £5,839 more than they would have a decade ago.
“The buy-to-let sector has faced a relentless stream of challenges over the last decade and landlords are now contending with substantially higher mortgage costs at the same time as sweeping legislative reform via the Renters’ Rights Act,” said Marc von Grundherr (pictured right), director at Benham and Reeves.
“While house prices have increased considerably over the last 10 years, higher borrowing costs have further intensified the financial burden facing landlords and this has been particularly notable for those utilising interest-only mortgages, which have traditionally formed a large part of the buy-to-let market.”
Von Grundherr noted that operational costs have also risen markedly in recent years, citing taxation changes, licensing requirements, energy efficiency regulations, and wider compliance obligations.