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PATH (Plymouth Access to Housing) are seeking properties in Plymouth for people in need of housing. There are many families with children and single people in temporary accommodation looking for a home.
All residential properties considered, rooms, flats, HMOs and houses.
There are numerous benefits and letting options for landlords who work with PATH including;
For more information please contact PATH;
easylet@pathdevon.org 01752 293719
When: Tuesday 26 September 2023 11:30am – 12.20pmTopic: Changes to the HHSRS and the new Damp and Mould GuidelinesRegister in advance for this webinar:
https://us02web.zoom.us/webinar/register/WN_epS3xNJiQ26SSn0cI9lQWgAfter registering, you will receive a confirmation email containing information about joining the webinar.
PLEASE NOTE, THIS IS NOT AN SWLA WEBINAR
The Prime Minister announced that the proposed plans, which would require landlords to upgrade private rented properties to EPC band C by 2025 or 2028, would be scrapped. The sector was awaiting confirmation following a consultation under Minimum Energy Efficiency Standards (MEES) Regulations about when properties would be required to meet EPC band C for all new and existing tenancies.
This move leaves landlords with no long-term clarity around what is expected of them and by when energy efficiency upgrades would now be required. It is important to realise that the current standard is for rental properties to be E or above- this still remains in place. It was unclear in the speech whether the ambition on non-domestic building is also being delayed.
Read more here; https://www.financialreporter.co.uk/sunak-scraps-epc-regulations-industry-reacts.html
It’s been a while since we last met with Alison, so we had lots of catching up to do. Items on the agenda included the lack of housing both in the Private Rented Sector and Student Sector, unrealistically low Local Housing Allowance rates, the high number of possession cases and landlords exiting the market (due to tax changes, mortgage rate changes and legislation changes).
We invited Alison to our next face to face Landlord Accreditation course which will be held in Plymouth in February.
Article by GoSimpleTax
It’s an all too familiar scene for many sole traders, landlords and other Self Assessment taxpayers. Despite leaving it until a week or two before the online-filing deadline on 31 January, you’re not too worried about completing your Self Assessment tax return. What could possibly go wrong?
Then you make a start, believing it will take you no time to get it all done and dusted, but you soon come to an abrupt stop. You haven’t got all of the necessary information to hand. You start to feel frustrated.
The minutes turn to hours and you have to put off making any progress with your Self Assessment tax return, because you need to go away and get together key information. You leave it for a few days. The online-filing deadline gets closer and you begin to worry. You forgot that as with many things in life – sound preparation is key to successfully completing your Self Assessment tax return. So, what’s the best way to prepare for doing your Self Assessment tax return?
What if you’re not already registered?
How to prepare to fill in your Self Assessment tax return
1 Decide how you’re going to file
About 12m people file a Self Assessment tax return each year and only 385,000 of them (3.2%) use paper forms. HMRC wants to phase out paper Self Assessment tax returns as much as possible, preferring for taxpayers to keep digital tax records and file their tax returns online. Completing a paper tax return takes longer and it’s a pretty arduous task, while mistakes can be more likely, which could mean you’ll need to start again.
Filling in and filing your Self Assessment tax return online is quicker and easier, with mistakes less likely, especially if you use Self Assessment tax return-filing software. Automatic prompts tell you which figures you need to enter and where, which provides additional peace of mind and may even help to ensure that you don’t pay too much tax.
Need to know! Some Self Assessment taxpayers can only use filing software to submit their tax return digitally, one example being expats with UK rental income to report. Filing software can cost just £50 or so for the tax year.
2 Know what supplementary pages you need to submit
As well as the main SA100 tax return, you may have to fill out and submit supplementary pages to report taxable income and tax expenses. Different types of taxable income have different supplementary pages, which each have their own number. The most common examples include SA103 Self-employment, SA105 UK Property and SA108 Capital Gains Summary. If you have more than one self-employed role that generates taxable income, you’ll need to complete an SA103 for each.
Need to know! Supplementary pages can be downloaded from government website GOV.UK or conveniently accessed via Self Assessment filing software.
3 Make sure that you know your UTR
In your SA100, you’ll need to include your 10-digit UTR (ie Unique Taxpayer Reference), which you’re given when you register for Self Assessment. It will be stated on your previous tax return, if you’ve submitted one. You’ll also need to state your National Insurance number.
Need to know! If you can’t find your UTR, you can also call HMRC on 0300 200 3310 for assistance. You’ll need to have some information to hand for security questions, such as your personal details and your National Insurance number.
4 Get together other vital information
When filling in your Self Assessment tax return other information you need can include:
Need to know! The above information should be relevant only to the tax year in which you are reporting taxable income to HMRC.
5 Get your expenses in order
You’ll also need summaries of your “allowable expenses”, which are costs that you can claim as tax expenses that relate to taxable income earned from self-employment, renting out property, overseas income, a business partnership, etc.
Claiming allowable expenses will reduce your tax bill. If you’ve been organised and you’ve been recording your allowable expenses throughout the tax year in a spreadsheet or accounting software, this will be simple to do. If not, having to wade through piles of sales receipts, invoices and bank/credit card statements could take a while, which is another reason why you should complete your tax return long before the filing deadline.
Need to know! If you’re not already doing so, start recording your costs into a spreadsheet or accounting software regularly, so that claiming them as tax expenses becomes much less time-consuming, while also giving you a better idea of your spending and expenses.
6 Find out which personal tax allowances you can claim
Personal tax allowances are amounts you can earn or receive in income without paying tax. The main UK personal tax allowances are available to sole traders and landlords, while others are available only in certain circumstances. HMRC won’t tell you if you can claim a personal tax allowance, you must find out for yourself if you plan to fill out your own Self Assessment tax return. The most common personal tax allowances are:
Don’t wait – file now!
Getting your Self Assessment tax return completed and filed as soon as possible is highly recommended. You can file any time after the end of the tax year (5 April) in which you received taxable income, there really is no need to leave it until weeks, days or hours before the online-filing deadline (midnight on 31 January).
Filing early doesn’t mean you’ll have to pay your tax bill sooner, but you will be able to find out how much tax you owe. You may even find out that you’re due a tax rebate. Getting your Self Assessment tax return out of the way earlier could certainly make your life much less stressful.
Income, Expenses and tax submission all in one. GoSimpleTax will provide you with tips that could save you money on allowances and expenses you might have missed.
Our software submits directly to HMRC and is the digital solution for Landlords to record income, expenses and file their self-assessment giving hints on savings along the way.
Covering all self-assessment pages, not just property, GoSimpleTax does all the calculations for you.
Article by GoSimpleTax
Wednesday 18th October 2023 @ 7.30pm Future Inn Plymouth, members and their guests welcome
It’s that time of year again! 2023-2024 membership renewal payments are due by 01 November 2023: £50.00.
How to pay-
BACS – (Please quote your name/membership number as the reference) to:
Account Name: SWLA Sort Code: 20-68-10 Account Number: 50498610
Cheque – payable to ‘SWLA’:
SWLA, 30 Dale Road, Plymouth, PL4 6PD
Card – You can call the office and pay by card over the telephone. Opening hours 10am – 3pm Monday to Friday.
A receipt for your renewal payment will be sent by email.
In a bid to enhance transparency and coherence in the property advertising landscape, the National Trading Standards Estate and Lettings Agency Team (NTSELAT) has introduced fresh guidelines focusing on terminology used in property advertisements, particularly in the realm of lettings.
The heart of the guidance revolves around three specific terms that are frequently employed within the context of lettings.
The scope of the guidance also extends to terms employed in both lettings and sales scenarios:
By addressing key terminologies in property advertising, NTSELAT’s fresh guidelines aim to foster greater clarity, mitigate confusion, and establish a more standardized approach to property transactions. As the industry adapts to these guidelines, stakeholders can anticipate a smoother and more transparent experience in the property market.
Article by NetRent
On the same day the national news headlines featured the seizure of £130 million in cannabis plants across the UK, the South West Regional Organised Crime Unit (SWROCU) was exhibiting at the Rent Smart Devon landlord event, Exeter Racecourse, to spread the word amongst landlords and letting agents about the dangers of cannabis cultivations within domestic properties.
Any property can be vulnerable to cannabis cultivation but there’s a concerning statistic that 94% of cannabis farms are located in domestic properties.
The SWROCU were one of many law enforcement agencies involved in the national operation targeting organised crime groups (OCGs) involved in growing cannabis. In the South West alone, the operation led to 67 arrests and £6.8 million worth of cannabis and weapons being seized.
OCGs involved in cannabis cultivation not only drive violence and antisocial behaviour in our communities, they also endanger the lives of people in neighbouring properties. Crucially, they exploit vulnerable people who are the victims of modern slavery, human trafficking, and organised immigration crime.
As well as actively pursuing the criminals involved, the SWROCU want to raise awareness of the hazards these growers pose by substantially increasing the risk of fires within properties. Often the electricity meter is bypassed, and electrical circuits overloaded to support the high-intensity lights, fans, and irrigation systems.
If you suspect your property may be being used to grow cannabis, ask yourself the following:
The consequences for landlords in both financial and legal terms by not taking action can be catastrophic. Therefore, it’s really important to report any suspicions you have about your own property or those in neighbouring premises to your local police force online or via 101.
If you would like to remain completely anonymous, you can report any information to the charity Crimestoppers on 0800 555 111 or online at crimestoppers-uk.org. The guarantee of anonymity means calls or online information can’t be traced and the only person who knows you called will be you.
Along with the South West’s five police forces and working with the Police and Crime Commissioners and independent charity Crimestoppers, SWROCU will continue to target and disrupt OCGs who are causing misery and harm in our communities, but they can only do that with the information provided by the community.
Article by the South West Regional Organised Crime Unit (SWROCU)
This has implications for landlords who have control over the communal parts of buildings (the responsible person). Typically, in the PRS this will mean landlords who let properties by the room.
Section 156 of the Building Safety Act updates the requirements around the performance of fire risk assessments and the provision of information to tenants about fire safety risks.
The new requirements mean that the responsible person must:
Record their completed fire risk assessment in writing, and in full (previously only specific information was required to be recorded).
Record the identity of the individual or company that has performed the fire risk assessment.
Demonstrate how fire safety is managed in the premises.
Share their contact information, including a UK based address with premises other responsible persons (if applicable) and the tenants.
Take reasonable steps to identify any other responsible persons in the same building.
Share all relevant fire safety information with incoming responsible persons when giving up control of the property.
Provide tenants with relevant fire safety information in a format that is easily understood.
The relevant fire safety information for tenants is:
The risks identified by the risk assessment.
The preventive and protective measures in place.
The name of the responsible person and a UK address where they, or their representative, can accept notices and documents.
The identity of any person appointed to assist with the risk assessment.
The identity of any competent persons nominated by the responsible person.
Any risks informed to the responsible person.
Any other matters specified in regulations made by the relevant authority.
Please note that, for landlords in England, this is in addition to the information that you are already required to provide because of the Fire Safety (England) Regulations 2022.
Competency of Fire Risk Assessors
Further updates around the competency of fire risk assessors employed by the landlord are also expected in the future. No date for this has been set but, in practice, most HMO landlords already employ a qualified professional to perform these risk assessments.
Article abridged from NRLA
A message from Plymouth City Council –
We are fast approaching the anniversary for HMO Licensing Legislation changes that took place in October 2018. As you will be aware, those changes introduced Licensing across a wider spectrum of property type and five years have now passed. Most of the properties where a Licence was issued following this change are due for renewal on the 30th September 2023 (some in October and November). If you are unsure please check your licenses. To assist in this and in preparation, Plymouth City Council have been issuing early renewal reminders – hopefully some of you may have received these already. If your Licence is due for renewal please visit our website by following this link to renew:
https://www.plymouth.gov.uk/apply-house-multiple-occupation-licence
The Housing Health and Safety Rating System (HHSRS) is a tool used to assess hazards in residential premises.
The HHSRS is risk-based and covers a range of 29 potential hazards, which are set out in Schedule 1 of the Housing Health and Safety Rating System (England) Regulations 2005. The HHSRS operates by evaluating the potential risk of harm to an actual or potential occupier from their living environment and is a means of rating the seriousness of any hazard identified. An HHSRS assessment does this by categorising a hazard by seriousness, generating a numerical score that falls into 1 of 10 hazard bands, with band J being the safest and band A being the most dangerous.
The HHSRS itself does not set a minimum standard, so the categorisation of hazards was introduced in order to do so. Hazards scored at bands A to C are ‘category 1’, bands D to J are ‘category 2’.
If a local council carries out an HHSRS assessment and identifies a category 1 hazard they must take enforcement action under the Housing Act 2004. The form this enforcement action should take is set out in section 6 of the Act.
The HHSRS also forms part of the Decent Homes Standard, 1 of the 4 consumer standards that registered providers of social housing must comply with. Criterion A of the Decent Homes Standard says that to be decent, a dwelling should be free from category 1 hazards.
A reviewed HHSRS that is accessible to landlords and tenants and efficient for local councils to use forms a vital part of our reforms to both the social and private rented sectors.
In our white paper, The charter for social housing residents, we committed to review the Decent Homes Standard and consider whether it needs to be updated to ensure it is delivering what is needed for safety and decency now. The first part of the Decent Homes Standard review concluded in autumn 2021. In March 2022, we brought together representatives from across both rented sectors to discuss what might be included in a revised Decent Homes Standard that applies to both sectors.
On 16 June 2022 we published our white paper, A fairer private rented sector, which sets out our plan to fundamentally reform the sector and level up housing quality in this country, delivering a private rented sector that is fit for the 21st century for 4.4 million households who call it their home. Our consultation on introducing a Decent Homes Standard to the private rented sector closed on 14 October 2022 and we are considering the responses.
The second part of the Decent Homes Standard review will now consider how best to deliver on our ambition on reducing non-decent homes for both social and private rented sectors.
The HHSRS was introduced in April 2006 by the Housing Act 2004 and has remained unchanged since then. In October 2018 the government launched a scoping review to consider whether the HHSRS should be updated and, if so, to what extent. The scoping review involved a wide-ranging consultation exercise in 2019.
This exercise concluded that, while there was considerable support for the strong links between health and housing that the HHSRS provides, all stakeholders would welcome a simplification of the assessment process. Local council officers found the system complicated to apply and full assessments were resource intensive. Housing providers and tenants found it difficult to understand the outcomes of assessments and felt that there was a discrepancy between the assessment process and other housing-based regulatory regimes that applied to housing provision. There was also majority support for an approach that sets out standards that could be met in most cases, supplementing the risk assessment aspect of the HHSRS.
Following this exercise government initiated a review of the operation of the HHSRS with the aim to bring it up to date, empower landlords and tenants to engage with the system, ensure alignment with other legislative standards and systems, including the Building Safety Act, and help with the effective enforcement of housing standards. To address the support for a standards-based approach, the review also defined what have been described as ‘indicative baselines’ used to make an initial assessment of whether a property contains serious hazards, and also investigated barriers to the use of digital technology to support assessments.
External researchers RH Environmental (RHE) were contracted to undertake the 2-year review, which concluded in 2022. RHE sourced the expertise to explore, assist and challenge their findings, and worked with academics from Cardiff Metropolitan University, Middlesex University and the University of Bristol.
Legislation and guidance that govern the enforcement of standards were outside the scope of the HHSRS review.
New regulations will be necessary to bring the revisions to the HHSRS into force.
Extensive stakeholder engagement was critical to the success of this review and was undertaken in the initial stages of the project along with in-depth literature reviews for each of the project outputs and workstreams. A multi-method approach to engagement, using a combination of regional online focus groups, one-to-one interviews and online surveys, was undertaken. Over 1,000 stakeholders with specialist experience and relevance to the HHSRS and housing sector contributed to the consultation.
To make it easier for landlords and tenants to understand the system, our suppliers produced a checklist that can be used to make an initial assessment (eg ‘stairs must be safe, secure, in sound condition, free of defects and projections, well maintained’).
Indicative baselines are incorporated into the revised HHSRS operating guidance (see above). These do not replace the whole risk assessment but are easier to understand. Where these baselines are met it is likely a property will be free from category 1 hazards.
The statutory HHSRS operating and enforcement guidance (section 9 of the Housing Act 2004) has been revised ensuring the guidance facilitates local councils’ effective use of the system, is more accessible to non-experts, and incorporates new thinking on assessments of high-rise residential buildings with cladding systems.
The proposed structure of the reviewed guidance consists of a suite of 3 ‘Housing Health and Safety Inspection and Assessment Manuals’:
New guidance has also been developed specifically for tenants, providing a simple overview of the way that local councils check the safety of homes using the HHSRS. This will explain how homes are checked and what happens if problems are found. This will empower tenants to understand what they should expect and better hold their landlords to account.
A comprehensive set of new case studies has been produced, encompassing the range of hazards, illustrating the utilisation of standards and incorporating a spectrum of high, medium and low risk scenarios. These will be available in digital format and, to continually refine the consistency of assessments, local councils will be able to regularly add to the case studies.
To make the assessment process more efficient for local authorities and more accessible to landlords and tenants, our suppliers produced a simpler means of banding the results of HHSRS assessments.
Our suppliers also recommended removing scoring ranges for each representative scale point to simplify the assessment process and found that colour coding and the use of descriptor terms aided both in assessment and comprehension of the scoring report by non-experts. Conclusions therefore include replacing the way the severity of a hazard is described (currently ‘Class I-IV’) with descriptor terms from ‘extreme’ to ‘moderate,’ and the use of colour coding to help convey the message around the seriousness of the hazard score, often termed a ‘traffic-light approach.’
Instructions on the final version of this simpler system have been written into the revised HHSRS operating guidance (see above).
Our suppliers have made recommendations for:
Our suppliers also carried out analysis of digital assessment, setting out how this should be interlinked with existing databases.
We will consider these recommendations in our ongoing work to support the rented sectors as part of our reform programme.
Our suppliers have recommended amalgamating and reducing the number of hazards assessed overall from 29 to 21:
To be suitable for amalgamation, hazards had to meet the reasoned criteria set out below, namely:
The revised list of hazards has been incorporated in the revised HHSRS operating guidance (see above).
To make sure the risk of fire in tall buildings can be assessed effectively (following the Grenfell tragedy), our suppliers carried out extra work on the Fire hazard and have recommended amalgamating it with ‘Explosions in Dwellings’. The ‘relevant matters affecting likelihood and harm outcome’, as listed in the operating guidance, were updated with specific minimum standards which were then field tested and found to mitigate 90% of significant fire hazards.
New regulations (an ‘affirmative Statutory Instrument’) are required to bring the conclusions of the HHSRS review into force. These will replace the existing regulations, which prescribe descriptions of hazards, the method for assessing their seriousness and the manner and extent of inspections of residential premises.
These regulations will be introduced after the conclusion of the Decent Homes Standard review.
Article from gov.uk Summary report: outcomes and next steps for the review of the Housing Health and Safety Rating System (HHSRS) – GOV.UK (www.gov.uk)
We are proud to be supporting Gas Safety Week 2023, taking place 11 – 17 September.
Gas Safety Week is an annual safety week to raise awareness of gas safety and the importance of taking care of your gas appliances. It is coordinated by Gas Safe Register, the official list of gas engineers who are legally allowed to work on gas.
Badly fitted and poorly serviced gas appliances can cause gas leaks, fires, explosions, and carbon monoxide (CO) poisoning. CO is a highly poisonous gas that can kill quickly with no warning, as you cannot see it, taste it, or smell it.
Landlords are legally responsible for the safety of their tenants. Landlords must make sure maintenance and annual safety checks on gas appliances are carried out by a Gas Safe registered engineer to ensure their tenants and wider communities stay safe.
If you’re a landlord, you are legally obliged to make sure:
Before any gas work is carried out always check the engineer is qualified to carry out the work that needs doing e.g., natural gas, domestic boiler. You can find this information on the Gas Safe Register website or by checking the back of the engineer’s Gas Safe ID card. Encourage your tenants to also check the card when the engineer arrives at the property, and to be aware of any warning signs that their gas appliance is working incorrectly, such as dark or sooty staining, excess condensation, pilot lights which frequently blow out and and error messages on the appliance’s control panel
For more information and to find or check an engineer visit GasSafeRegister.co.uk.
To book your free tickets, register here; https://somerset.homebuildingshow.co.uk/swlandlords
The Centre for Sustainable Energy (CSE) has partnered with the Tenancy Deposit Scheme (TDS) Charitable Foundation to advise and support landlords of privately rented properties to understand and meet MEES obligations. MEES stipulates that privately rented homes must have a minimum EPC of E before they are let.
The main aim of MEES is to help reduce the number of renters who struggle with high energy bills and live in cold and unhealthy homes. Everyone wants to make rented homes more energy-efficient, which can save money and prevent issues like dampness and mould. Both landlords and tenants benefit from better energy efficiency.
When properties are well taken care of, they’re cheaper to run and have fewer problems. This also means that people who live in them are healthier, and it helps to reduce the likelihood of fuel poverty. When homes are properly insulated – residents stay warmer and healthier.
If you’re a private landlord renting out a domestic property on an assured tenancy, regulated tenancy or domestic agricultural tenancy, CSE can help you to:
For full information on the support CSE can offer you, visit www.cse.org.uk/support-for-landlords or email luke.buckler@cse.org.uk
Article by The Centre for Sustainable Energy
Government-funded legal advice and representation (legal aid) is available to any tenants facing possession proceedings.
Help is available from the moment tenants receive written notice that someone is seeking the possession of their home. Tenants financial situation will not affect their right to access this support and they will not need to pay.
A housing expert (funded by the government) will work with tenants to identify what may be causing someone to seek possession of their home and recommend potential solutions. For example, they may be able to provide legal advice on matters such as:
In the event tenants are unable to resolve matters and they are asked to attend a court hearing, a housing adviser can also provide free legal advice and representation at the court.
Article from Gov.uk
For more information;
Legal aid for possession proceedings – GOV.UK (www.gov.uk)
Further article on the subject; New FREE court service for tenants risks more landlords facing big eviction costs – LandlordZONE
PLUS AN EXTRA 10% OFF FOR SWLA TRADEPOINT MEMBERS! 4th – 7th AUGUST 2023
Along with ARLA-Propertymark and other Landlord Associations, we are campaigning to ensure that the Renters (Reform) Bill and future UK Government legislation leads to positive changes for the sector. Please complete this survey, all results will be pooled by Propertymark and the responses will be presented to the UK Government.
Private Landlord Survey;
https://r1.dotdigital-pages.com/p/Z6K-175L/renters-reform-bill-landlords-survey
Letting Agent Survey;
Luke visited our office on 29th June for meeting with Iain Maitland (SWLA President) and Steve Lees (SWLA Chair) to discuss all things housing. Many discussions were had, mainly highlighting the lack of housing and the reasons for that –
What can we do? Luke heard our views and experiences and takes that knowledge forward for future meetings and discussions in parliament. We look forward to seeing Luke again later in the year – and welcome all South West MPs to our office so we can advocate for landlords who provide quality housing in the Private Rented Sector.
The Rent Smart Devon landlord open event was a brilliant afternoon/evening. We had a stand amongst other landlord related businesses and services – we caught up with many of our Exeter based members and spoke to lots of new members who were keen to sign up when they heard what we had to offer our members. Talks were held throughout the day – keeping attendees updated on Renters Reform, Landlord Tax Planning and more.
Thank you to East Devon, Exeter City, Mid Devon District and Teignbridge councils for putting on a lovely event.
If you missed this event – look out for the next one! We will let our members know where and when……
A huge Happy 90th Birthday to Bob Usher – a valued founder member of the SWLA’s (voluntary) Committee!
CHEERS TO YOU BOB!!
Further Legal Update 2023 Course Booked As August Course Now Full
Venue – Online
If you are accredited this will count towards your CPD hours, but the course is open to all.
Cost for SWLA members – £35, Cost for non-SWLA members – £40
Course will cover –
As well as other relevant issues.
Places secured upon receipt of payment, book your place through the office 01752 510913.
Course will be instructed by Stephen Fowler from Training for Professionals.
Wednesday 12th July 2023 – 3pm – 6pm
@
30 Dale Road, Plymouth PL4 6PD
Come and meet staff, committee and other SWLA members.
There will be a cream tea for you to enjoy while you chat.
All welcome.
We hope you will take the opportunity to pop in.
The Bank has raised rates for the 13th time in a row. The surprise jump from 4.5% to 5% aims to tackle inflation.
The Bank has been aggressively hiking interest rates for over a year as it tries to get inflation back to its target of 2% – a task that has been complicated by record food prices and high energy costs.
According to the notes of the Monetary Policy Committee meeting, the reason for the big hike in the base rate is because inflation in the services sector has remained persistently high, while wages are growing faster than it had predicted back in May.
Chancellor Jeremy Hunt said of the announcement to push rates up to 5%: “High inflation is a destabilising force eating into pay cheques and slowing growth. Core inflation is higher in 14 EU countries and interest rates are rising around the world, but the lesson from other countries is that if you stick to your guns, you bring inflation down.”
The increase in interest rates will bring further misery to homeowners on tracker mortgages and those about to re-mortgage, but it could benefit savers.
WHY IS THE BANK OF ENGLAND RAISING INTEREST RATES?
The rate of CPI inflation continues to be very sticky: it was 8.7% in the year to April, and again in the year to May. Experts had expected inflation to fall.
It means that inflation is currently over four times the Bank’s 2% target.
Raising interest rates is one of the tools that the Bank uses to try and bring inflation down. The idea is that increasing rates makes it more expensive to borrow money, meaning people have less to spend, and so reducing demand and therefore easing price rises. It had been anticipated that the Bank would raise rates to either 4.75% or 5% today.
WHAT IS THE OUTLOOK FOR INTEREST RATES?
Commentators expect that more rate rises could be on the way.
Daniel Casali, chief investment strategist at the wealth manager Evelyn Partners, said: “With inflation still elevated (albeit slowing) and a tight labour market to boot, the Bank may well continue to raise interest rates well into the latter part of 2023. Of course, much will depend on the incoming macro data before the MPC decides on whether to raise interest rates again. For the moment, expect sterling to continue to appreciate against a dollar that is weighted down by a Fed pause on interest rates, at least for now.”
The next interest rate announcement is due on 3 August.
WHAT DOES THE RATE RISE MEAN FOR HOMEOWNERS?
Another rise in interest rates spells bad news for those with mortgages and loans. There are more than 1.4 million people on tracker and variable-rate mortgage deals, and these people will often see an immediate increase in their monthly payments.
Eight out of 10 mortgage customers are on a fixed rate. The so-called “mortgage bomb” – with rocketing mortgage rates and a shrinking range of products to choose from – has become a huge issue. An average two-year fixed deal was 2.29% in November 2021, but is now 6.19%, according to Moneyfacts. The average five-year fixed rate is 5.82%.
Article from Money Week
https://moneyweek.com/economy/uk-economy/bank-of-england-hikes-interest-rates-5-per-cent