The government must explain how it will help the private rental sector - both landlords and tenants - through the cost of living crisis.
That’s the message from Jeni Browne, director of buy to let mortgage broker Mortgages for Business.
Her comment comes after the latest Bank of England base rate rise from 2.25 per cent to 3.0 per cent, and is based on so-called swap rates - these are the agreements between mortgage lenders, and are used to offset the lenders’ risks involved in fixed rate mortgages.
“What landlords and property investors need to remember is that swap rates influence mortgage pricing for market-funded lenders, which is good news for fixed rate products. Rishi Sunak and Jeremy Hunt’s appointments and subsequent actions have been met with approval by the money markets which has meant that swaps have started to ease down, so whilst the [Bank of England’s] Base Rate rises, we are expecting fixed rates to come down slightly over the coming weeks.
“Really, we need clear guidance from the government on how the private rental sector will be supported through this economic crisis. Tenants and landlords are both struggling with rising costs, and more needs to be done to get people through the coming months."
Browne continues: “The 0.75 per cent increase to the Base Rate is the largest in 33 years. While this may seem overwhelming, unfortunately, it’s necessary to keep tackling inflation.
“Really, we need clear guidance from the government on how the private rental sector will be supported through this economic crisis. Tenants and landlords are both struggling with rising costs, and more needs to be done to get people through the coming months."
While Browne may be saying that the story behind the headline base rate rise is not as bad as many fear, there is nonetheless other gloom from the Bank of England.
It is warning that we’re set for a full blown recession for all of next year and the first half of 2024
The Bank currently forecasts that interest rates will rise to 5.2 per cent in late 2023, before starting to fall back.
Inflation is forecast to hit 11 per cent by the end of this year, before dropping back from early 2023 as previous energy price hikes drop out of the calculations.
GDP is expected to fall about 0.75 per cent by the end of 2022. It’s then expected to keep falling through 2023, and the first half of 2024. Meanwhile wages will fall 0.25 per cent behind rising prices this year and 1.5 per cent behind in 2023, and the unemployment rate is forecast to hit 5.9 per cent at the end of 2024 and 6.4 per cent by the end of 2025.
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HA HA, help from government, you are barking up the wrong tree there, they will continue to stick the knife in and twist it, we all know this and will chose our own response to it
If the Government really want to help they should keep their noses out of the business - don't you agree
They will help us alright…. Over the edge of the cliff 😂😂.
Well the £400 off energy bills will help tenants (and I guess furlough kept some people paying rent in the pandemic) but very unlikely they will do anything directly for landlords. Too much to hope for. What might happen is more empty properties might get rented as people need the income?
Realistically treating us as a business and taxing us accordingly would be the biggest help.
Abolish Section 24 and treat our finance costs exactly the same as every other business would be a good start.
Spot on Jo, but alas we are the baddie in this pantomime that the Government have created. It is a simple solution for them to get rid of Section 24 and it would make a huge difference as in reality rates are very low.
The 5.25% forecast is not current at all if you read the BoE minutes. It was based on the mood in the exact same 7 days that Liz Truss resigned and the Tories were choosing her successor. Lenders/markets were pleased to see her go, but still spooked a few days after the date that forecast was rubber stamped on 25 October, after which swap rates dropped signficantly. Already old news.
Yep the gap between interest rates and mortgage rates were only a temp situation otherwise mortgage companies would have shut the shop. Expect products in the 4%+ next year
And we all know that the George Osbourne section 24 bomb has slowly detonated. We all know whilst the ministers that pushed this through throw their hands up now that their London rents have gone up.
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