Interest rates rising, putting pressure on UK homeowners
The Royal Institution of Chartered Surveyors (RICS) says that rising interest rates are putting pressure on homeowners in the UK, prompting some to consider selling their properties. In turn, this trend may reduce rental properties’ availability and increase costs for renters. RICS further says that the tenant reform bill could cause more significant restrictions on rental supply, affecting both landlords and renters. Fewer homes for rent means demand will outstrip supply, driving up rental prices for available properties, thereby exacerbating difficulties faced by renters with increasing rental costs.
Landlords also affected
Proposals to ban no-fault evictions in England could further discourage landlords from investing in properties. A key piece of housing law, known as Section 21, allows landlords to evict tenants without giving a reason. After receiving a Section 21 notice, tenants have only two months before the landlord can apply for a court order to evict them. However, some landlords are considering their future due to proposed changes to the law, which might further reduce rental properties’ availability. Lenders predict that the Bank of England will raise interest rates because the inflation rate, as measured by general price increases, has taken longer to slow down than anticipated. That has pushed up mortgage costs for homebuyers, remortgaging, and homeowners, including buy-to-let owners.
Rentals could become scarce
RICS says that the availability of housing to rent has already decreased. Higher costs and tenant reform could further reduce supply while driving up rental prices for available properties. “Interest rate increases are also affecting the rental sector, and landlords are increasingly deciding to leave the sector and sell properties,” said RICS senior economist Tarrant Parsons. Landlords face many of the same pressures that property owners face and would be affected by the expected future increases in interest rates by Bank of England.
What rental rights do you have?
If you are renting a property and have questions about your rental rights, read on:
– How much can my landlord raise the rent? It depends on your agreement, but the increases must be fair, realistic, and commensurate with local properties, with at least a month’s advance notice.
– Can my landlord evict me? The owner needs to follow strict rules in giving written notice. Once the notice period has expired, the landlord can initiate the eviction procedure through the courts.
– Can a landlord deny people benefits? No. DSS policies are illegal discrimination, states Charity Haven. Some councils have lists of private landlords who rent to tenants claiming benefits.
Additional piece:
The housing crisis in the UK has been evident for years, with increasing demand for affordable rental properties and an inadequate supply. While the market has experienced a modest increase in supply, demand still outstrips it. Rising interest rates and proposed legislative changes could exacerbate this situation, making it even more challenging for renters to find affordable homes. Among the proposed legislative changes, the ban on no-fault evictions would limit a landlord’s ability to terminate a tenancy agreement without giving a reason, making it harder for them to evict problematic renters.
Landlords may also be negatively impacted by rising interest rates. As their mortgage payments increase, they may consider selling properties to avoid further financial pressure, further reducing the supply of rental properties. This might lead to higher rental prices, thereby increasing affordability issues for renters.
The UK Government needs to consider various policy proposals to address the housing crisis, including building affordable homes, incentivizing landlords, and introducing favorable tax breaks. The government must provide necessary support to ensure renters have affordable and suitable homes. Such measures will have an immediate and long-lasting impact on those in need of housing, thereby reducing the cost of living for renters.
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- By Kevin Peachey
- cost of living correspondent
image source, fake images
Rising interest rates are putting pressure on homeowners, prompting some to consider selling, pollsters say.
In turn, that could further reduce the availability of rental properties and increase costs for renters, according to the Royal Institution of Chartered Surveyors (RICS).
Some landlords are also considering their future due to proposals to ban no-fault evictions in England.
RICS said “storm clouds have gathered” over the UK property market.
Lenders predict that the Bank of England will raise interest rates again because general price increases, as measured by inflation, are taking longer to slow down than previously anticipated.
That has pushed up mortgage costs more than expected, not just for homebuyers and remortgaging, but also for homeowners and buy-to-let owners.
The availability of housing to rent has already been reduced, so higher costs, as well as the tenant reform bill, are likely to continue that trend, according to RICS, which represents the surveyors.
Fewer homes for rent means demand continues to outstrip supply, driving up rental prices for properties that are available.
“Interest rate increases are also affecting the rental sector and, combined with the impending reforms proposed in the government’s tenant (reform) bill, landlords are increasingly deciding to leave the sector and sell properties , which causes more restrictions on the rental supply,” said the RICS senior economist. , Tarrant Parsons.
A new proposed law would abolish the ability of landlords to evict tenants without cause in England.
What is a no-fault eviction?
A key piece of housing law, known as Section 21, allows landlords to evict tenants without giving a reason.
After receiving a Section 21 notice, tenants have only two months before the landlord can apply for a court order to evict them.
Mortgage rates are rising for everyone, and analysts predict this will slow down the housing market as buyers can’t get a proper mortgage or prefer to wait for rates to drop.
Landlords, as property owners, face many of the same pressures and would be affected by expected future increases in interest rates by the Bank of England.
“The brokers’ reports read like increasingly desperate cries for help as the imbalance in the market worsens with each passing month,” said Sarah Coles, director of personal finance at investment platform Hargreaves Lansdown.
That could increase rents if the supply runs out.
“Since rent absorbs a much larger share of people’s income than mortgages, these increases will add insult to injury. It will make it even more difficult for tenants to stay on top of their finances,” said Ms. Coles.
Difficulties in waiting
RICS said storm clouds had gathered with higher mortgage rates for all homeowners looking for a new fixed deal.
Brokers have warned that those who decide to try to beat the current increases and move to a standard variable rate for the time being will face particularly large increases.
“A wide range of people are locked into these super-high standard variable rates, including older borrowers who can’t refinance and homeowners who don’t qualify for rate changes when their fixed deals end,” said Aaron Strutt of Trinity broker. Finance.
“Some lenders have a much higher standard variable rate than others, we tell our customers how important it is to choose a lender that treats their customers fairly when their rates come to an end.”
What are your rental rights?
- How much can my landlord raise the rent? It depends on your agreement, but the increases must be fair, realistic and commensurate with local properties and there are usually a month in advance.
- Can my landlord evict me? The owners need follow strict rules How to give written notice. Once the notice period has expired, the landlord can initiate the eviction procedure through the courts.
- Can a landlord deny people benefits? No. DSS policies are illegal discrimination, says Charity Haven. Some councils have lists of private landlords who rent to tenants claiming benefits.
There is more information about your rental rights and where to seek help. here.
https://www.bbc.co.uk/news/business-65833840.amp
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