The interest rate hike meeting of the Bank of England’s Monetary Policy Committee last week was postponed. This was done in deference to the passing of Her Majesty, Queen Elizabeth II.
For the mourning period that followed, the Committee rescheduled the meeting from last Thursday, 15 September, to this week. In anticipation of this week's meeting, the housing market is urging the Committee not to consider an interest rate hike.
The Committee will be meeting on Thursday, 22 September, to discuss raising the base interest rate again, or not.
The Committee is expected to implement an interest rate hike for the sixth consecutive month this week. Speculations are running wild that the Committee may vote for an increase from 1.75% to as high as 2.25%.
Interest Rate Hike Will Affect Key Section Of Housing Market
This development follows the dip in inflation to 9.9% earlier this month. Jonathan Rolande is the spokesman for the National Association of Property Buyers (NAPB). He says that another interest rate hike could seriously hit a key section of the market. People who have already started cutting back on spending to save their cash.
“Another increase in rates will only affect this smaller section of the market who are more than likely already cutting back on whatever they can,” stated Rolande. Instead of an increase, more support should be given to the housing market to prevent a crash.
Implement Other Measures Of Support, Not Interest Rate Hike
Moreover, Rolande says that this support could come in the form of measures like cutting stamp duties. “We need to start by reforming stamp duty. A positive step would be to see zero rates for pensioners moving downmarket in terms of bedroom numbers, reduced rates for those involved in buy to let transactions, and zero rates for first time buyers in less affluent areas.”
Another measure that Rolande suggested is using disused council land for housing. It could either be enrolled into build-to-rent programmes or be sold to developers with specific conditions of its use.
A third measure Rolande suggests is tax relief for property investors and landlords. “Finally, I’d like to see ministers offer tax relief for landlords who commit to long term rental with sensible, set rent increases. Renting longer term is a greater risk for the owner so reward them for providing more security for tenants.”
Interested to watch our Property Interest Rate Hike Predictions from last month to see how well they aged? Click this link now.
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