With a 25% deposit, the typical mortgage loan required stands at £200,968, up from £143,474 10 years ago

The monthly cost of a buy-to-let mortgage has risen by as much as 64% over the past decade, according to new research from London lettings and estate agent Benham and Reeves, as landlords navigate both higher borrowing costs and legislative change brought about by the Renters’ Rights Act.

The firm analysed buy-to-let mortgage costs over ten years, using average UK house prices, a 25% deposit, and a 25-year term, comparing full repayment and interest-only structures at prevailing rates from a decade ago and today.

Average UK house prices have increased 40.1% over the period, from £191,298 to £267,957. With a 25% deposit, the typical mortgage loan required today stands at £200,968, up from £143,474 10 years ago. Over the same period, the average buy-to-let mortgage rate has moved from 3.19% to 3.73%.

For landlords on full repayment mortgages, the average monthly payment has risen from £695 to £1,031 — an increase of 48.4%, or £336 per month.

The sharpest rise 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 jumped 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, director at Benham and Reeves.

He said: 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.