Inflation is already at 6.2% and many economists are forecasting levels above 10% for as long as the next 2 years. Important lessons can be drawn from history, and landlords should take the following action without delay:
- Those with a buy to let mortgage should re-finance to secure a fixed-rate multi-year loan. The Bank of England Base Rate interest Rate is forecast to rise to at least 1.5%, double the current level. Securing a fixed rate loan now will protect landlords from rising borrowing costs.
- Hold-on to your properties and invest to improve energy efficiency. In times of inflation, savings typically lose real value, borrowings including mortgages reduce in real terms and assets like houses increase in value and offer stable investment returns.
- Actively review rents at least annually to keep pace with inflation to avoid earnings reducing in real terms.
Landlords are hit daily by overwhelmingly negative press narrative but having weathered uncertainty during Brexit and the hardships of lockdown, landlords have weathered the storm and are now better-placed than most for an economy dominated by inflation.
