Average buy-to-let (BTL) rates for some typical two-year fixed rate deals favoured by landlords have doubled since the start of the year, according to the latest data from Property Master.

Property Master’s Mortgage Tracker, which follows 30 lenders, found that the average rate for a typical £160,000 BTL mortgage fixed for two years for a loan to value (LTV) of 60% had more than doubled since the start of this year, rising from 1.69% in January to 3.43% in August. 

This increases the monthly cost including fees by £232 from £262 to £494.

The same mortgage fixed for five years had also increased from 1.94% in January to 3.5% in August, which represents an increase in monthly cost including fees from £273 in January to £481 in August, up £208. 

Commenting on the latest data, Property Master chief executive Angus Stewart says: “The cost of BTL mortgages continues to rise inexorably. Obviously, much of this reflects the Bank of England’s decision to hike interest rates for the sixth time earlier on this month but there are other factors at play too.”

“We are seeing reduced competition in the BTL mortgage market caused by a combination of factors with some lenders using higher rates to manage customer demand whilst others are taking the opportunity to widen their margins.”

“We have said for some years that increased regulation and higher costs were leading to the professionalisation of the private rented sector. In reality, this will mean fewer but larger landlords.  For many of the smaller players in this market, unaffordable rises in mortgage costs will undoubtedly lead them to conclude BTL no longer works for them.”

“Indeed, the latest figures from HMRC show a dramatic increase in takings from Capital Gains Tax suggesting many landlords are deciding this is the moment to sell up.”