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Declining Profits Concerning Buy-to-Let Landlords

Published by Prerana
Posted Date: July 11, 2024 , Modified Date: July 11, 2024

UK’s Buy-to-Let landlords are witnessing steep drops in profits, making them concerned about a potentially looming rental crisis. According to a recent study, landlords with new Buy-to-Let mortgages are seeing a 45% decrease in annual returns compared to April 2020. This decline is due to increasing mortgage rates, leading to fewer rental properties available and higher rent prices.

Why Are Buy-to-Let Profits Declining?

Landlords are seeing a drop in profits because of high mortgage rates. Currently, the average interest rate for a two-year Buy-to-Let mortgage (with a 75% loan-to-value ratio) is 4.73%. With higher mortgage rates, landlords have to pay more interest, which lowers their profits.

BTL Property Worth & Return

Since April 2020, landlords with a Buy-to-Let mortgage for an average property valued at £230,318 could expect to make £776 per month after covering the mortgage interest, totalling £9,309 annually. Fast forward to April this year, and landlords with a mortgage on an average property now valued at £281,373 see their monthly returns decrease to just £424, resulting in an annual return of £5,087. This represents a significant decline of £4,221 in potential rental income per property each year.

What Are the Implications for the Rental Market?

Many landlords are leaving the rental market because it is becoming less profitable. This means there are fewer rental properties available, making the rental market more competitive and increasing prices for renters. A money expert says that the rental market has been struggling because of rising interest rates, and this is affecting renters.

The high rental prices are causing a lot of stress for renters. In March, rent prices in the UK went up by 9.2%. Even though the rate of increase is starting to slow down, it is still very high. This is why Edwards says the government needs to step in and do something about this crisis. There just are not enough rental properties available to meet the demand.


The UK's Buy-to-Let market is in trouble. Landlords are making less money because mortgage rates are going up. This means there are fewer rental properties available, so rent prices are going up. This is making it hard for people who want to rent. More and more people are asking the government to do something about this. It is really important to fix these problems so that there are good housing options for everyone.

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