The Bank of England has blamed higher rents on more landlords than usual quitting the private rental market within its detailed quarterly report on the economy.
Its Agents’ Summary of Business Conditions report, which covers the period between July and August this year, highlights trading conditions across a range of sectors including housing compiled by its 12 regional representatives.
This is used in part by the bank’s Monetary Policy Committee to inform its interest rate decisions – the most recent of which was published yesterday revealing that its base rate would remain at 5.25% for another two months.
The agents’ report overall that economic activity remained subdued over the summer, and that “there were growing concerns about the outlook – most notably from contacts in consumer-facing businesses, but also from the business services sector”.
Turning to housing, the report says: “contacts said that demand had remained strong [for privately rented property].
“Supply was lower than it was a year ago, as tighter regulation and higher mortgage rates had caused some smaller buy-to-let landlords to leave the market.
“The strength of rental demand, relative to supply, meant that higher mortgage rates were generally being passed through to rents.
“There was little sign of a marked increase in rent arrears, although some contacts were worried that arrears could worsen later in the year.”
This is not the first time that the Bank of England has flagged up problems for smaller landlords and problems this is likely to present for the private rented sector.
In February the bank’s notes to accompany that month’s interest rate decision also said more landlords than normal were quitting the sector.