Is now a good time to invest in Buy-to-Let?

Is now a good time to invest in Buy-to-Let?
Mike Whitehead

Author: Mike Whitehead - Content Editor

Updated: December 4, 2023

The financial landscape is changing around us quickly, which can have ramifications on investing in a buy-to-let property. Here, we identify reasons why now may not be the best time to become a landlord, but also highlight why it could be a suitable investment for you.

Buy-to-let properties have long been a popular investment. However, arguably, that was against a backdrop of historically low interest rates – enjoyed ever since the financial credit crisis in 2008.

Now, in a post Covid era and with inflation at 40 year highs, the Bank of England has started to raise interest rates – and fast. That has a knock on effect for both borrowers and savers, so if you are looking to borrow to fund your buy-to-let, is buying a rental property a wise decision?

Yes – buy now

Here are some plus points to investing in a buy-to-let now.

Cheap borrowing costs

While the Bank of England has raised interest rates, they’re still at historic lows. That means your borrowing costs are still comparatively cheap, making a property purchase more affordable than in the future – when rates look likely to rise further.

Increased demand

If interest rates do rise, it makes mortgages more expensive and therefore getting on the property ladder is more difficult for people. That increases demand for rental properties and gives landlords the ability to raise rents.

Rising rents

On average, rental yields increase by about 2.3% a year. Landlords have the autonomy to raise their rents to help offset the rise in their related costs.

No – look to invest in other asset classes

While the above advantages can make for compelling reading, it’s important to balance them against these negative factors:

House prices

As one of the ways landlords increase their wealth is through the long term price appreciation of their properties, the market has to be on an upward trajectory. When interest rates rise, that cools the housing market. Plus, in the high inflation environment we are currently experiencing, many individuals will not be able to afford to save for a mortgage deposit leading to a subsequent lack of demand for homes, further slowing price growth.

Rising associated costs

Importantly, potential buy-to-let landlords also need to consider the increasing regulation and the impact that has on their costs. For instance, annual gas inspections or legionella compliance can add up. Plus being a buy-to-let landlord does come with many other associated costs. You’ll likely need a letting agent to market the property for example. The annual maintenance cost can vary greatly too, which can materially eat into any profits you make.


Finally, just because interest rates are still at historic lows does not necessarily mean you can afford the recent increases. If the income you can achieve for a potential property is too low versus what your mortgage and other associated expenses are, it is not a good time for you to invest in a buy-to-let. However, if you want to use your deposit money for a real estate investment, there are ways that you could make it stretch further. A broker could help you if you are still keen on investing in the property market.

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