Rents Should Not Be Raised Following Base Rate Hike
Rightmove is advising the private rental sector not to pass on interest rate rises to tenants.
Yesterday the Bank of England increased base rate from 0.25 per cent to 0.5 per cent.
Tim Bannister, the portal’s director of property data, says: “Landlords might be wary of passing the effects of an interest rate rise onto their tenants due to high average asking rents across Great Britain right now.
“Landlords are currently seeing increased rents after the pandemic, and there is a limit to what tenants can afford or are prepared to pay.”
Eleanor Bateman, policy and campaigns manager at Propertymark, comments: “With inflation looking likely to peak higher than previously thought and the Omicron wave appearing less of a long-term threat, today’s rise of the base rate to 0.5 per cent had been anticipated by many.
“Some analysts now expect the base rate to reach 1.5 per cent by the end of the year and lenders will of course have factored this into their products already.
“How quickly the base rate is increased may now depend on factors such as wage growth and electricity prices, which are arguably more likely to have an impact on inflation and household expenditure.
“Rising electricity prices may lead the [Bank of England] to take a more gradual approach to increasing in the base rate, but it would nonetheless be prudent for those on variable rate mortgages to plan for future increases which do still appear inevitable.”
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