Two releases in the same week

On 17 September the Monetary Policy Committee held the base rate at 3.75%, voting 6 to 3 once again, with the three dissenters preferring a rise to 4%. CPI rose to 3.1% in August from 2.9% in July, driven largely by transport costs, and the Bank expects inflation to climb further as higher energy prices feed through to households and businesses. Nobody voted for a cut. The next decision is on 5 November.

Three days earlier Zoopla published its rental report. Average UK rent stands at £1,343 a month, up 2.6% over the year, with £1,097 outside London. Homes available to rent are 3% below last year and new supply is down 6%. Enquiries per available property have reached 5.3, the highest in nearly two years.

The two together are the useful picture

Debt is not getting cheaper. The market has spent the summer repricing toward a higher path for Bank Rate than it expected in the spring, which is the opposite of the assumption a lot of 2026 underwriting was built on in February.

Rental income, meanwhile, is strengthening as availability falls. Zoopla expects growth of 4% to 5% by the end of the year, and the supply contraction that started in May has not reversed.

What it means for buy-to-let

  • Interest cover is where this gets decided. Rising rent against a flat-to-rising cost of debt is survivable. Rising debt cost against flat rent is not, and that is the scenario to stress-test rather than the comfortable one.
  • Affordability is improving for tenants, which makes the growth durable. This is the third consecutive year in which earnings have outpaced rents. Rent rises that track wages get paid. Rent rises that outrun them produce arrears and voids.
  • 5.3 enquiries per property is a void-risk number. In practical terms it means a well-presented property in a decent location should not sit empty, which protects the annual return more reliably than a headline rent increase does.

What we are doing

We are underwriting at current rates with no assumed cuts, as we have all year, and we have now added a 0.5 point upward sensitivity on debt cost at refinance rather than treating today's curve as the ceiling. On the income side we are not raising growth assumptions above what a property achieves today. Where clients hold stock with a fix maturing in 2027, we are modelling the refinance now rather than at the point the offer letter arrives.

The bottom line

A fourth consecutive hold with the hawks still in place, and a third year in which earnings are still outpacing rents. The income side of buy-to-let is getting stronger and the financing side is not. Deals that work on today's rent at tomorrow's rate are the ones worth doing.