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

The BTL mortgage broker revealed that the average rate for a typical £160,000 BTL mortgage fixed for two years at 60% LTV has risen from 1.69% in January to 3.43% in August.

Property Master’s latest BTL Mortgage Tracker confirmed that these figures take the monthly cost including fees from £262 to £494, an increase of £232.

According to the data, the same mortgage fixed for five years had also increased dramatically from 1.94% in January to 3.5% in August, which is an increase in monthly cost including fees from £273 in January, to £481 in August, a rise of £208.

The monthly BTL Mortgage Tracker from Property Master follows 30 lenders who constitute around 75% of total BTL mortgage lending.

As well as typical two and five-year fixed rate BTL mortgages, Property Master’s research also tracks the cost of BTL mortgages taken out by landlords through a limited company as opposed to those taken out by private individual landlords and the cost of house in multiple occupation (HMO) mortgages, and mortgages taken out by landlords buying holiday lets.

Property Master chief executive, Angus Stewart, commented: “The cost of buy-to-let 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 buy-to-let 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.”

Stewart added: “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 buy-to-let no longer works for them.

“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.”

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