With higher mortgage costs, fewer and fewer people will be able to afford their own homes, but they must live somewhere, which is driving demand for rental property and enabling landlords to increase rents.
Stuart Law, managing director of Assetz, commented: "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. It will be many months before the true consequence of these continued rises begins to filter through the system, while in the meantime inflation is expected to drop to just 2% or less by the autumn.”
With mortgage rates rising, many property investors are now looking to pass increased costs onto their tenants who are in no position to leave the rental market and enter property ownership.
Law continued: “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.”
