Tenants are likely to bear the costs of recent interest rate rises over the past year, according to Assetz.
The property investment specialist says that as mortgage costs increase, more people will seek rental property, which will allow landlords to increase rents. Landlords will also increase rents to cover the increased costs of borrowing due to five interest rate rises in the past 12 months.
Assetz say they think the recent spate of interest rate rises is disproportionate to the threat posed by inflation and that the Bank of England should let the effects of previous rises settle in before making further moves.
Stuart Law, managing director of Assetz, says: “It can take more than two years for interest rate changes to have an impact on inflation, yet the Bank of England continues to raise rates in search of an immediate effect, despite admitting this two year lag effect on its own website.”
Analysts expect inflation to drop to 2% or less by autumn, within the target rate set by the treasury, but interest rate rises will continue to hit property owners and tenants for some time.
Law says: “The Bank of England may pain investors through higher interest rates but the MPC should consider that this will inevitably result in higher rents for tenants, who will unfortunately end up paying through the nose.”
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