Published: 23/08/2022 By Tam van Wyk
We are now in peak holiday season; the roads are empty, and the airports are full to bursting. It means, for most of the UK, this is one of the quietest periods of the year. Normally, even the press have to scratch around for some decent headlines, but not this year – with the Tory leadership campaign, the war in Ukraine, inflation and the cost-of-living crisis, there’s plenty of material for them to choose from.The property sector, though, has managed to shrug off all the doom and gloom and prices continue to rise. There are, though, quite a few articles in the press at the moment voicing concern over the potential effects of rising mortgage costs and soaring rents. The truth is, though, in the sales market, there is such a shortage of housing stock in many areas that Rightmove have been forced to reassess their figures for 2022, increasing their expected growth from 5% to 7%. Nor, with employment levels at a 50-year high, is there any pressure to sell. There is no doubt that all the increases in the base rate will eventually modify demand, but the financial stress tests that were brought in after the 2008 financial crash will ensure that the vast majority of borrowers will be able to cope.
The rental market is a slightly different matter. Worries over tenants’ ability to cope with rising rents whilst also being squeezed by soaring living costs have led to all sorts of hair-brained schemes being proposed, including the usual calls from the opposition for rent controls. However, the problem is, there is just not enough rental property available and the government’s punitive approach to landlords is making a bad situation worse. Most of the proposed solutions merely tinker around the edges when what is really needed are more new houses and more BTL investment. Rising rents are at least stimulating fresh landlord activity, but it would make an even bigger difference if full tax relief was restored to buy-to-let mortgages, as increases in mortgage costs are eating into many landlords’ profits and forcing them to put up rents.