RAC’s Fuel Watch recently highlighted that the cost of filling a family car with petrol was a third higher in March than it was a year ago while filling a diesel car was suggested to cost 40% more.
For mortgage holders, the Bank of England's Monetary Policy Committee voted 8–1 to increase the base rate from 0.5% to 0.75% in March, the third consecutive increase. Since its February Report, the Committee said that global developments are "likely to accentuate both the peak in inflation and the adverse impact on activity by intensifying the squeeze on household incomes".
Of course, this will not immediately impact those borrowers on medium to longer-term fixed-rate deals but we are seeing headline rates increase as lenders adjust their product ranges accordingly. And, with additional base rate hikes in the offing, these are likely to rise further over the course of 2022.
Focusing on the BTL market, according to the latest market analysis from HomeLet, the average rent in the UK reached another record high of £1,078 in March, up 0.8% from the previous month. The data showed that when London is excluded, average UK rents stood at £910, a rise of 0.9% against last month, with all regions across the UK witnessing an uplift in annual variance.
Average rents in the capital are reported to have risen again to an average of £1,770 PCM – an increase of 0.7% on last month’s figures. However, the largest monthly variance was seen in the South West – up 1.8% to an average of £1,017 PCM. Scotland saw the largest annual variance at 12.9% – pushing the average rent in Scotland up to £770.
It will be interesting to see how landlords manage the demands of their tenants during this period, especially having lived with the Covid pandemic for the past two years. Generally speaking, landlord and tenant relationships have greatly improved over this period but this cost of living crisis is expected to place even greater scrutiny on these relationships moving forward.
From a lender perspective, on the back of rising interest rates, heightened monthly outgoings and as part of a responsible lending approach, many are not only putting up rates but also reviewing and adjusting their affordability calculations. A move that is likely to impact rental calculations linked to pay rate and restrict the amount that some landlords are able to borrow.
These trends really underline just how important it is for all landlords to seek good, professional advice when seeking any finance or refinance in the current economic climate. It’s also understandable that some landlords are erring on the side of caution and reassessing their levels of exposure during these times.
However, it’s also prudent to point out that there are still a large number of highly competitive deals on offer, especially for professional landlords who are in a position to take advantage of property-related opportunities as they present themselves. And many opportunities do remain available in a BTL market where demand continues to far outstrip supply.
