The buy-to-let market in Devon looks very different in 2026 from how it looked five years ago. The combination of higher mortgage rates, significant tax changes, increasing regulatory requirements, and a shifting tenant market has changed the calculation for both existing landlords and those considering entering the market for the first time. This guide covers the current landscape honestly.

The Mortgage Rate Reality

The era of sub-two-percent buy-to-let mortgage rates is over, and the rates available in 2026, while more stable than the peak of 2023, remain significantly higher than the rates on which many existing landlords based their original investment calculations. Five-year fixed rates for standard buy-to-let mortgages currently sit in the four to five percent range for most borrowers at typical loan-to-value ratios.

This changes the yield calculation meaningfully. Properties that generated positive cashflow at two percent mortgage rates may be broadly neutral or marginally negative at current rates, particularly when combined with the full impact of Section 24 tax changes that removed mortgage interest relief for higher-rate taxpayers. Understanding your current numbers honestly is essential before making any decisions.

Section 24 and the Tax Position

Section 24 of the Finance Act 2015, fully phased in since 2020, prevents higher and additional-rate taxpaying landlords from deducting mortgage interest costs from rental income before calculating their tax liability. The effect is that many landlords now pay income tax on a gross rental income figure that does not reflect their actual profit after financing costs.

For landlords who are still operating under the assumption that the tax position resembles the pre-2020 position, a review with an accountant is strongly recommended before any further property decisions. The gap between perceived profit and actual after-tax return has widened significantly for higher-rate taxpayers.

EPC Requirements: The Coming Deadline

Current government proposals, though subject to confirmation, require rental properties to achieve a minimum EPC rating of C before new tenancies can begin, with a backstop date for all tenancies approaching. Many older Devon properties, particularly period houses and rural cottages, currently rate at D or below. Understanding the EPC position of your rental portfolio and the potential cost of improvement works is an essential planning exercise for 2026.

Where Devon Buy-to-Let Still Makes Sense

Despite the changed landscape, Devon continues to attract buy-to-let investment for good reasons. Rental demand in key locations remains robust. Holiday let returns in coastal and tourist areas continue to outperform standard residential lets for appropriately positioned properties, though the mortgage products for holiday lets and the tax treatment differ from standard buy-to-let.

Portfolio restructuring, converting standard buy-to-let properties to holiday lets where planning permits, or consolidating portfolios around the strongest-performing assets, are strategies worth considering with appropriate professional advice.

Getting the Right Mortgage Advice

Buy-to-let mortgage products are more complex than residential mortgages and the differences between lenders in terms of stress testing, portfolio treatment, and lending criteria are significant. Independent mortgage advice is particularly valuable in this market.

Contact Riviera Mortgages to discuss your buy-to-let mortgage options in Devon.