Landlords Braced for Base Rate Rise

Yesterday, the Bank of England’s decision to hold the Base Rate at 0.5% for the 13th consecutive month came as no real surprise given the weak economic backdrop and a reduction in the headline inflation rate.

 The rate is unlikely to change in the short term.

But looking over a slightly longer term view, the consensus among landlords is for a slow, steady rise in base rate over the next twelve months.

Young Group’s latest Young Index which polls 500 UK residential landlords each quarter, reveals that the average expectation for base rate in Q1 2011

now stands at 1.25%.

Unsurprisingly, almost all respondents (94%) expect the Bank of England base rate to be higher than the current all time low of 0.5% by the beginning of 2011.

But what is interesting is that although landlords are clearly expecting a rise to take place during the next 12 months, they don’t expect th at rise to be

a l

arge one.

10% of respondents believe that base rate will have risen to more than 2.0% by Q1 2011 (up from 6% last quarter) but only 1% expect the base rate to have risen to in excess of 3% by this time next year – still well below the long term average of 5.0%.

The new Young Index data shows that the average base rate expectation for Q1 2011 stands at 1.25%, a slight rise from the 1.1% predicted for Q4 2010 in last quarter’s Index.

Base rate expectation

Base Rate Expectation

To view the entire Young Index Q1 2010 results, including price outlook, political preference and landlords’ views on regulation, visit:

http://www.younggroup.co.uk/downloads/PrivateRentedSectorMarketUpdate.pdf

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