Rates on Hold, Northern Rents Rising: October 2026 Update
The Bank of England held interest rates at 3.75% on 17 September. That is the headline. The detail underneath matters more: three of the nine people who set rates voted to raise them, and the Bank expects inflation to climb above 4% early next year.
At the same time, rents in the North of England are rising faster than anywhere else in the country, and the number of homes available to rent has dropped sharply.
So the short answer for anyone buying a buy-to-let in the North this autumn: don't plan on cheaper mortgages any time soon, and make sure the rent covers the mortgage at today's rates, not the rates you hope for next year.
Here's the detail.
Rates: on hold, but leaning up
The Bank's September decision kept Bank Rate at 3.75% by a 6–3 vote. The three who disagreed wanted 4%.
The reason is energy. Inflation was 3.1% in August, and the Bank expects it to reach around 3¾% in the last quarter of this year and slightly above 4% in early 2027. When inflation is heading that way, rate cuts are off the table. The next decision is on 5 November.
What this means for lenders: buy-to-let pricing has stopped falling. Moneyfacts put the average two-year fixed buy-to-let rate at 5.47% at the start of September, according to Which?, with no change on August.
I'll be straight about one more thing. Lenders who accept a social housing lease are a smaller pool, and in our experience they usually price higher: around 6–7% is what we see for social housing, against 5–6% for a standard buy-to-let. Your broker will give you the real number for your circumstances.
The rents: the North is leading
The ONS figures published on 16 September show:
Average UK rent rose 3.8% in the year to August, to £1,400 a month.
The North East and North West had the fastest rent growth of any English region, both at 5.8%.
The North East still has the lowest average rent in England, at £788 a month.
The North East also had the fastest house price growth, at 4.9% in the year to July, against 1.4% for the UK as a whole.
Put simply: the cheapest region in England is where rents and prices are rising fastest. That is the gap we've been working in all year.
Fewer homes to rent, and fewer to buy
The other side of the story is supply. Data from The Letting Partnership, reported by Mortgage Solutions on 29 September, shows the number of homes available to rent in England fell from 127,696 to 112,190 between the second and third quarters of this year. That's down 12.1% in three months. In Merseyside it fell 30.5%, and in Greater Manchester 20.5%. The firm puts it down to landlords leaving after the Renters' Rights Act.
We see the buying side of this on the ground. The usual September pick-up in houses coming to market hasn't really happened this year, in the North West or the North East. Fewer houses for sale means less choice and less room to negotiate. It doesn't mean panic. It means the deals that do stack up go quicker.
What a mortgage actually costs against the rent
Let's put numbers on it. Take a typical two-bed terrace in Liverpool at around £100,000, leased to a social housing provider at £850–£950 a month (that's our usual range there).
With a 75% interest-only mortgage, you're borrowing £75,000:
at 5.47% (the Moneyfacts buy-to-let average), that's about £342 a month
at 7% (the top of the range we see for social housing lenders), it's about £438 a month
Either way, the rent covers it comfortably, and that's before you count the bit that matters most: on a provider lease, the rent is guaranteed for the length of the lease, and it's paid even if the house is empty. There's no letting agent, no voids and no tenant chasing.
What it doesn't cover: the exterior, the electrics, the boiler and the pipework are still yours. Boiler cover at around £15–£20 a month takes most of the sting out of the boiler. Leases also end, usually after 3–5 years, and need renewing. Budget for both.
These are illustrations, not quotes. They're before purchase costs, finance costs, insurance and tax.
What this means for you
Don't wait for rates to fall. The Bank is talking about rises, not cuts. Buy on numbers that work at today's rates.
Rent growth is in the North. At 5.8% a year in both northern regions, the gap between rent and price is still widest here.
Stock is thin. If you're waiting for the perfect house, you'll be waiting longer this autumn. Be ready to move when one stacks up.
If you're buying from abroad, three things to budget for honestly. First, currency: a swing in the pound can move your returns more than a rate change. Second, a lower loan-to-value: overseas buyers usually need a bigger deposit. Third, stamp duty: non-UK residents pay an extra 2% on top of the 5% additional-property rate. You can check yours on our stamp duty calculator. For your own tax position, speak to your tax adviser.
FAQ
Will mortgage rates come down this year?
The Bank held at 3.75% in September, and three members voted to raise rates. The next decision is on 5 November. Nobody can promise a direction, but cuts look unlikely while inflation is rising. Plan for today's rates.
Why are northern rents rising faster than the rest of England?
Prices are lower, demand is strong and supply is falling. The ONS shows both northern regions at 5.8% rent growth, the fastest in England, and rental stock in Merseyside and Greater Manchester has dropped sharply since the Renters' Rights Act.
Does a social housing lease protect me from rate rises?
No. It protects your income, not your mortgage cost. The rent is guaranteed for the lease term, which makes your cash flow predictable, but if you're on a variable rate or your fix ends, your mortgage can still go up. Whether to fix, and for how long, is a question for your broker.
Can I still buy if I live overseas?
Yes. Many of our investors live abroad and buy without seeing the house. Expect a lower loan-to-value, the 2% non-resident stamp duty surcharge, and currency risk. A broker who works with overseas buyers will tell you what you can borrow.
Where are you buying at the moment?
The North West (Liverpool and Merseyside, Manchester, Wigan, Lancashire) and the North East (South Tyneside, Gateshead, Sunderland, Newcastle, Middlesbrough and County Durham). In the North East a house typically costs £75,000–£105,000. You can see what's live on our current deals page.
Want to talk it through?
If you're thinking about a buy-to-let in the North and want to know whether the numbers work for you, book a 30-minute Discovery Call. No pressure, just a straight conversation about your budget and your goals.
Comments