How September’s rate hold affects landlords

Last month, the Bank of England’s Monetary Policy Committee announced the sixth consecutive interest rate hold – meaning that rates have remained at 3.75% since December 2025 when they were cut from 4%. Another cut had never been on the cards for the September meeting – but a raise was being muted, leaving landlords and other property owners feeling a little nervous.

The possibility of a rise had been heightened by the rise in inflation to 3.1% announced the day before the MPC meeting. Meanwhile, the US Federal Reserve and the European Central Bank had both recently opted to hike rates, and the fear was that the Bank of England would do the same.

Three of the nine-strong committee voted to increase the rate to 4% and the question is no longer if an interest rate rise will happen but when. For landlords, the question is what impact the hold will have and what lies ahead.

Certainly, the prospect seems gloomy. To date, the surge in global energy prices has had a “quite subdued” impact on general inflation in the UK, according to the Bank of England’s governor Andrew Bailey. However, its impact is expected to grow – particularly if high energy prices are sustained and as the UK moves into the peak energy usage of winter. The committee hinted strongly that an interest rate rise will come soon and the next meeting, in November, could be when the first rise is seen.  

More time to research new deals

For landlords who need to refinance, the rate hold has given them longer to research new fixed rate deals, but they need to do so fast. Higher swap rates have already pushed up mortgage rates and an interest rate rise would push mortgage costs up even further. Landlords who need to refinance buy-to-let mortgages will want to act fast before their fixed rates end and before the Bank of England does raise rates.

Relief for those on tracker or variable rates

Those landlords on tracker or variable rates will also have breathed a sigh of relief at the hold, since an interest rate rise would have meant an instant rise in their buy-to-let mortgage costs. They could choose to gamble for longer but must also act fast to secure a fixed rate deal if they don’t want to face the prospect of higher costs.

Tenants are likely to continue to rent

With an interest rate rise edging ever further, tenant affordability to buy is also threatened. Those already on the hunt to buy may accelerate their plans and lock in rates, especially ahead of the rumoured four possible rises next year. However, others will want to sit tight until there is greater certainty around interest rates and renting offers them the flexibility to do that. That at least provides a strong pipeline of demand for landlords.

Continued strong demand will push rents up further

The continued demand will also impact rental prices, and therefore the rental income that landlords will be bringing in, a relief to those that are highly leveraged and who may have seen their costs rise as a result of uncertainty. 

Predictability of costs

The interest rate hold also provides certainty for landlords who face an array of increasing costs in addition to their buy-to-let mortgage, including maintenance and general running costs, as well as the possibility of additional taxation in the autumn budget. Careful management and budgeting will remain crucial over the coming months, whenever an interest rate rise materialises.

Cowell Norford buy, sell and let properties in Rochdale, Oldham and Bury, offering exceptional levels of service and knowledge that result in better outcomes for our clients. Contact us to find out more. 

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