rental properties

The Bank of England has raised the base rate to 0.75%, just the second time it has been hiked in a decade.

Members of the Monetary Policy Committee (MPC) voted unanimously to raise the base rate by 0.25%, taking it to 0.75%.

The last time the base rate was above 0.5% was in February 2009 when it stood at 1%, and in November 2017, interest rates rose from 0.25% to 0.5%, 15 months after they were dropped to an unprecedented low.

The move came as no surprise as the markets were pricing in a 91% chance of a rate hike, but it does come in the face of weak and fragile UK economic growth figures.

The MPC said that the recent data which showed a dip in output in the first quarter was temporary, as momentum recovered in the second quarter. GDP is also expected to grow by 1.75% per year on average and unemployment is low, and is projected to fall a little further.

Turning to inflation, which stood at 2.4% in June, the MPC said it lingers above the 2% target due to “external cost pressures“, resulting from sterling’s past depreciation and higher energy prices. These pressures are projected to ease over the forecast period while domestic cost pressures are expected to rise.

Minutes from the MPC meeting noted: “Taking these influences together, and conditioned on the gently rising path of Bank Rate implied by current market yields, CPI inflation remains slightly above 2% through most of the forecast period, reaching the target in the third year.

“The MPC continues to recognise that the economic outlook could be influenced significantly by the response of households, businesses and financial markets to developments related to the process of EU withdrawal.

“The Committee judges that an increase in Bank Rate of 0.25 percentage points is warranted at this meeting.

“The Committee also judges that, were the economy to continue to develop broadly in line with its Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to the 2% target at a conventional horizon. Any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.”

From 1 April, new lets and relets with an energy performance certificate (EPC) rating of ‘F’ or ’G’ cannot be rented out, and existing tenancies have until 1 April 2020 to upgrade their EPCs. Any landlord letting a property that fails to meet the standard required could face a penalty of up to £4,000.

 

Lloyds Banking Group has indicated that it is looking to increase its buy to let offering in 2013.

It is understood the group not only plans to increase total lending but plans to increase buy to let as a proportion of lending to around 21 per cent compared to 17 per cent in 2012.

This will be good news for new and existing landlords, as the buy to let lender offers competitive product rates with a range of arrangements fee options.

If you are looking to purchase a buy to let property or remortgage one you already hold, give us a call on 01489 580020 or complete the contact us form for a personal illustration, once we have assessed your financial situation and requirements.

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We offer whole of market advice for all types of customers, whether you are a first time buyer, home mover or looking to purchase a buy to let property. Being independent we are able to offer impartial advice from the whole of the market to ensure you get the product that suits your financial needs.

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Equity release is a way of releasing cash from your property, either through selling a percentage to the reversion company or taking a mortgage on it, while allowing you, the homeowner to continue living there as long as you wish.