When Mark bought his first rental flat a decade ago, friends told him property was the safest long-term plan. Years later, rising interest rates, tax changes, and tighter regulations made him pause and ask a serious question: Is Being a Fruitful Landlord Still Feasible? Like many UK landlords, Mark was not looking for hype. He wanted clarity, structure, and facts so he could decide whether to hold, refinance, or exit the market.
As a landlord, you may manage a mixed portfolio that includes HMO mortgages, limited company buy-to-let, or more traditional buy-to-let mortgages. Your portfolio is a valuable financial asset that requires regular review and careful planning. With regulations evolving and market conditions shifting, ensuring your investments remain sustainable is essential.
This article explores the key factors affecting landlords today, including tax treatment, borrowing limits, and interest rate pressures. It also explains how Connect Mortgages supports experienced landlords in reviewing their position, improving cash flow, and adapting to the modern property market.
Buy-to-let Mortgages and Rising Costs
Recent industry research by BVA-BDRC shows that over 60 per cent of UK rental properties are mortgaged. This means that changes in interest rates directly affect landlords’ finances.
Since December 2021, the Bank of England base rate has increased sharply, reaching 5.25 per cent in August 2023. During the same period, average two-year fixed mortgage rates rose from around 2.4 per cent to approximately 6.85 per cent, according to market data.
For landlords using buy-to-let mortgages, these increases have placed pressure on monthly affordability. Buy-to-let rates are typically higher than residential rates and often include arrangement fees. While some landlords can increase rent, market conditions and tenant affordability may limit this option. In some cases, landlords must cover higher mortgage costs out of pocket.
Most buy-to-let lenders require a minimum deposit of 25 per cent and apply rental stress tests. Many assess rental income at 125% or more of the mortgage payment, which can limit borrowing and refinancing options. That said, it is no wonder that the NRLA has said that the “Government must act to protect the rental market as the Bank again hikes interest rates”.
The Challenges Landlords Face Today
The question Is Being a Fruitful Landlord Still Feasible? is shaped by several structural challenges.
- Tax changes: Since 2016, mortgage interest tax relief for personally owned rental properties has been restricted. This has reduced net returns for many landlords and led some to review whether limited company buy-to-let structures may be more suitable, depending on individual circumstances.
- Interest Coverage Ratio requirements: Lenders use the Interest Coverage Ratio to assess affordability. Higher stress rates and stricter calculations have reduced borrowing capacity for some landlords, limiting portfolio growth or refinancing flexibility.
- Market conditions: Higher interest rates have reduced purchasing power and slowed transaction volumes. While property values have stabilised in many areas, funding new acquisitions or major refurbishments has become more challenging for leveraged landlords.
Identifying Opportunities Within Your Portfolio
Despite these pressures, proactive landlords continue to find opportunities. Regular portfolio reviews are essential. A full assessment can highlight where improvements are possible and where risks can be reduced.
Key strategies include:
- Portfolio diversification: Spreading exposure across different property types and locations can help manage risk. A mix of single-let, HMO, and limited company properties may offer greater resilience.
- Rental income reviews: Ensuring rents remain aligned with local market conditions helps maintain consistent income and sustain tenant demand.
- Property improvements: Energy efficiency upgrades and planned maintenance can reduce long-term costs and protect asset value.
- Refinancing where appropriate: A buy-to-let remortgage may allow landlords to restructure borrowing, manage cash flow, or release equity, subject to lender criteria and affordability.
How Connect Mortgages Can Help Landlords
Property investment involves complex financial decisions. Connect Mortgages works with experienced landlords to provide structured, compliant advice tailored to their individual goals.
- Tailored mortgage solutions:
Every landlord portfolio is different. Whether you hold properties personally or through a company, our advisers assess your circumstances and recommend suitable mortgage options, including portfolio lending and refinancing strategies. - Access to a broad lender panel:
We work with a wide range of lenders, including specialist providers. This allows us to support landlords with complex income structures, HMOs, and limited company borrowing. - Portfolio review and planning:
Our advisers carry out detailed portfolio assessments to identify opportunities to improve cash flow and manage risk. This includes reviewing existing borrowing and future funding options. - Ongoing market insight:
Landlords benefit from regular updates on lending criteria, regulatory changes, and interest rate movements, so decisions are made with current information.
Landlords may also wish to review protection such as Landlord Insurance to ensure their investment remains protected against unforeseen risks.
Is Being a Fruitful Landlord Still Feasible?
The answer to Is Being a Fruitful Landlord Still Feasible? depends on individual circumstances. Some landlords own property outright and are less affected by interest rate changes. Others maintain modest borrowing relative to property value, providing flexibility.
Demand within the Private Rental Sector remains strong due to ongoing housing supply shortages. While short-term challenges exist, rental demand continues to support long-term viability for many landlords.
Property has historically shown long-term value growth, although this cannot be guaranteed. Capital appreciation, rental income, and tax position all play a role in determining outcomes.
Rising living costs, tax changes, and regulatory requirements mean some landlords are reassessing their future in the sector. However, with informed planning and professional advice, many continue to operate sustainably.
The Role of the Connect Group
Connect Mortgages is part of the Connect Group. Connect Experts and Connect for Intermediaries are trading divisions of Connect IFA Ltd.
Mortgage professionals can Join Our Mortgage Network. Landlords seeking regulated advice can “Find Mortgage Advisers.”
This group structure supports both advisers and clients across the UK.
Being a landlord today requires active management rather than passive ownership. Profitability depends on funding structure, tax planning, property performance, and long-term objectives. While challenges exist, opportunities remain for landlords who stay informed and adapt.
If you are reviewing your portfolio or considering your next steps, speaking with a specialist adviser can provide clarity. Contact Us to discuss your situation and explore suitable mortgage options.
Thank you for reading our “Is Being a Fruitful Landlord Still Feasible? | Buy-to-Let” publication. Stay “Connect“-ed for more updates soon!
