Higher rents caused by more landlords than usual quitting says Bank of England

bank of england mortgages

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].

Smaller landlords

“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.


  1. Except in this case they’ve tampered too much with a PRS model, which although not perfect, worked, and essentially provided affordable housing looking back on it. It is now disintegrating before their eyes and even if they know they have gone too far, its politically impossible to turn tide back.

  2. Utterly ridiculous headline. Increase in mortgage rates and the tax squeeze is absolutely killing the PRS.
    There is a housing crisis, the social sector is unable to maintain and sustain suitable housing and has been propped up for years by the PRS . Many families, single occupants and couples see the PRS as a long term housing solution. The only way to increase stock is to make property investing attractive again.

  3. High interest rates are just one of the more recent costs that are causing LL to leave the long-term letting sector.

    They were leaving long before IR increased.

    Higher IR may well have pushed many LL to the tipping point.

    Especially those LL subject to S24.

    So the BoE is partially correct but for political reasons refuses to quote why lots of LL are leaving the long-term letting sector.

  4. Sure, highly geared landlords are leaving because of interest rates. Others are leaving because of the landlord reform bill. Personally, I have no borrowing but am still concerned. If Gove does not bury his inflated ego believing he is right and consult with landlords the future is bleak. There will be no winners, tenants in particular will pay the price. Landlords can sell and move on thus depleting the number of houses available for rent which will raise rents still further. Tenants not evicted on section 21 will have a reason for eviction putting them at the bottom of the list of prospective tenants

    • By productive you mean those that work ?? at least we agree on one thing. I am selling to first time buyers and not new buy to letters as I want to shrink the private rental sector and thus make it more difficult for those that do not work lol

  5. It’s not just higher interest rates it’s selective licensing, tenant fees ban, council tax payable in void periods, remove of wear and tear allowance, Clause 24 finance costs, holding deposit only one weeks rent, security deposit max 5 weeks rent, landlords to pay for replacement cladding not developer, Right To Rent checks, EPC minimum C, court and bailiff delays, housing benefit frozen and no longer paid direct to landlord……all this even before we lose Section 21, removal of fixed term tenancies, and be forced to take benefits tenants and pets.

  6. Not to mention 190+ other pieces of legislation introduced by this govenment that are anti-landlord in their effect.
    I used to be a tennant in my early years in Hastings, an employment black spot, if you know it, for 30 years. I was stuck on the dole for years, and the I jobs I managed to get were dustman jobs and cleaning public toilets with the local councils.
    I then managed to find a job with a local TV repair shop, and as a handyman at a old peoples home. I finally decided to obtain a degree with the OU, and suddenly lots of doors were open for me soon after, and I became a computer IT Eng. contractor. It was only because I bought a car that I was able to work at better jobs in other areas that things went well for me. Being able to move to a new location quickly within a few weeks helped me gain all sorts of well paid jobs and contracts. Of course this could be done ONLY IF I COULD RENT A PLACE IN THE SAME AREA AS THE JOB WAS IN. If I couldn’t move to the area for the new job, by renting in that area, I would still be cleaning toilets and emptying dustbins in Hastings I expect, stuck there forever.
    You must have a mobile workforce for people to allow them to get on in life, and that means rooms and flats easily available to rent. Buying is not an option for obvious reasons! It takes too long and ties you down too much in one area, and is totally inflexible. Fine if you are retiring, but I needed to move around the country quickly and easily, which is what the employers wanted and needed. Destroying the PRS will also destroy peoples ability to better themselves, and will cause big problems for businesses too, as they wont be able to get the best staff available, at short notice.
    The country demands and needs a free and open PRS. Destroying the PRS will destroy the recovery of the country. As an example in 1980’s I was working in York City. There were no rooms or flats available. I had to stay in a tent! After a few months of looking for a room or flat, I gave up as my savings ran out and I had to return back to Hastings. Nobody can say I never tried!
    Finally I managed to get a well paid, full time work in London and things have just got better and better. I’m now retired and living in my own house. It’s been very hard, but with no PRS it would have been impossible.

  7. I hope the BoE copied the Labour party into their astonishing findings, as they’ll be the ones most likely to need answers as to where the PRS disappeared to!!
    Once again, the BoE are a long way behind the curve when it comes to their analysis of economic conditions. Please tell me they didn’t get paid to produce this information, as it smacks more of plagiarism!!


Please enter your comment!
Please enter your name here