Bank of England increases Base Rate to 05%

With these continual accruing costs I now have to pass on these further costs as much as I can in the form of rental increases to the current marketable rate – I have historically left my rental rates well under the market rate. However, my hands are now forced and s13 statutory notices will be drafted this evening and sent to every tenant – With the talk of further inflation hitting 7% by Spring, ever-increasing costs, s24 and more interest rate rises on the way no doubt, it has become untenable to keep my rents under market rateable rates.

For me, the rate rise equates to an average additional expense of £18 per month per property.

The calculation I used was total value of mortgages outstanding X 0.25% divided by the number of properties I own.

Should have got the extra vote swung and made it .75%. Inflation is a grim for everyone. Slam on the brakes.

So as the RPI includes housing costs I’m guessing that the bank is taking account of the fact that increasing interest rates is also going to increase rents? And that increasing interest rates will fuel inflation? And that this will also depress disposable income?

Reply to the comment left by dismayed landlord at 03/02/2022 – 12:54
I think this rate rise will go the opposite way and fuel inflation. Working households can only absorb so much extra expense before they start demanding a pay rise and that’s what starts the spiral.

All business owners with debt will need to increase costs. This includes landlords having to raise rents.

The Governments solution to the “cost of living” crisis is to increase everyone’s mortgages, and increase National Insurance. ???

Reply to the comment left by Beaver at 03/02/2022 – 12:58
Sorry but did you give a rent reduction when the rates went down.. I really don’t think its that big a deal I am used to rates at 5%+ and have always based my model on rates that high. If you thought rates would stay at 0.25% or lower for decades to come then your business model is massively flawed…

There is an alternative view also of inflation that it will eat away at that debt.

The big question will be will rents keep up with inflation, will the market tolerate rent increased in line with inflation? especially with other pressures like gas and food that renters are also having to contend with..

I do agree though there will be a shift away from landlords not giving rent rises and those that are massively below market rate will definitely feel like they have room to increase rents.

I think if inflation does stay high for an increased period there will be more pressure on wages to increase and more people will start to move jobs in search of higher pay..

I have already raised rents via S13 so cant do again for another 12 months, but as soon as I can I will – have no choice. I cannot subsidise tenants. If they had a mortgage on their own home it would be no different. We all have to pay our way.

you have a valid point Mark – but this is not the 1970’s 80’s anymore and there are differences in attitudes and the global response times to information. We are more than ever influenced by other factors in the world. I would find it sad if lessons were not learnt from history.
Dealing with high inflation is not difficult (been there and bought the t-shirt/video watched the film) but this is a different generation with diffrent parameters.
High inflation was always going to be the fall out from the last 2 years. The key is stopping it as it only benefits the rich. That would be all us filthy rich landlords. Joking aside it only widens the gap between well off and the less well off. Totally against the concpet of Gove’s paper. If there is actually anything in there yet of substance.

Squeeky bum time!