Interest rate cut won't dampen rental demand

11 2008
The Bank of England's latest cut to the base rate of interest is unlikely to dampen demand for rental property in Britain, experts predict.

As had been widely anticipated, the Bank's monetary policy committee announced earlier this week that the base rate is to be cut from 5.25 per cent to five per cent, a move welcomed by some personal finance specialists.

However, given that house prices are still unrealistically high for a significant proportion of students and young professionals, and that many lenders may not pass on the reduction to their customers, it seems likely that the move will not lead to many people moving out of the rental sector.

Peter Beckett, a spokesman for I Am Moving, said: "This is not going to set the market on fire… It will certainly take more than this to get the housing market moving again.

"At this stage renting is seen as a better option by many than buying a house."

Earlier this week the Liberal Democrats called the government's latest plans to help people onto the property ladder as "tokenism", arguing that the mooted £1,500 grants will only help a handful of people. ADNFCR-1219-ID-18547995-ADNFCR

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