Rising geopolitical tensions in the Middle East are beginning to ripple through the UK mortgage market, driving a sharp increase in buy-to-let fixed rates, according to Moneyfactscompare.co.uk. Since the start of March 2026, both two- and five-year deals have surged to their highest levels in over a year and two years, respectively, adding significant cost pressures for landlords already navigating a challenging environment.
The impact is being felt not only in higher borrowing costs, now around £1,100 more on a typical £250,000 loan, but also in a rapidly shrinking product landscape. Buy-to-let mortgage choice has fallen by roughly 1,300 deals in just a matter of weeks, limiting options for landlords and increasing the urgency around securing competitive rates.
Landlords also face further financial challenges over the next few years to meet new private rental rules. Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, provides further insight:
“Soaring borrowing costs will cause pain to landlords this year, as they join millions of consumers facing higher mortgage repayments. This is terrible news, as rising costs could lead to higher rental payments for tenants, or a drop in the pool of properties available for rent if landlords decide enough is enough and sell off their portfolio. The unrest in the Middle East has caused absolute mayhem in the residential mortgage market, buy-to-let rates are also being hiked, and hundreds of deals have been pulled from sale.
The positive sentiment entering 2026 has been shattered, and landlords not only have to face higher borrowing costs but also prepare themselves for the Renters’ Rights Bill, which comes into effect at the start of May 2026. Those who were to take out a mortgage now, compared to the start of this month, will face higher repayments of £1,100 more a year. This is based on a borrowing of £250,000, over 25 years at 5.29%, versus 4.66% at the start of March 2026.
It is entirely possible that landlords may have to take on an additional loan this year to cover refurbishment costs, to ensure they abide by the Decent Homes Standard, which is set out in the Renters’ Rights Bill, again coming into force this May. It is of course, essential that tenants feel safe and secure in their homes, and it will be ever more essential to have a dwelling as energy-efficient as possible with rising costs expected this summer.
Thankfully, lots of progress has been made to make private lets more energy-efficient over the past six years, under the Minimum Energy Efficiency Standard (MEES) regulations, whereby landlords have been prohibited from letting properties with an EPC rating below E. However, landlords’ costs will escalate further, as they are expected to invest up to £10,000 as a spending cap to reach an EPC rating of C by October 2030, subject to the value of a property. If that EPC rating is not achieved, landlords could face substantial fines, as the rules apply to all tenancies. Seeking advice will be essential for new or existing landlords to keep on top of the changing legislation and how rising costs and interest rate rises will hit their profit margins.”
