The Bank of England’s decision to hold the Base Rate at 0.5% for the 13^th consecutive month came as no real surprise given the weak economic backdrop and a reduction in the headline inflation rate.  This is unlikely to change in the short term.

However, taking a slightly longer term view, Young Group’s Young Index which regularly polls 500 UK residential landlords, reveals that the average expectation for base rate in Q1 2011 now stands at 1.25%.

Unsurprisingly, almost all respondents (94%) expect the Bank of England base rate to be higher than the current all time low of 0.5% by the beginning of 2011.

10% of respondents believe that it will have risen to more than 2.0% by Q1 2011 (up from 6% last quarter) but only 1% expect the base rate to have risen to in excess of 3% by this time next year – still well below the long term average of 5.0%.

The latest Young Index data shows that the average base rate expectation for Q1 2011 stands at 1.25% a slight rise from the 1.1% predicted for Q4 2010 in last quarter’s Index.

Young Index: Headline Results for Q1 2010

• 100% of landlords intend to hold their residential property investments for the next 12 months.
• 47% intend to hold their assets for at least 10 years.
• 24% of landlords intend to retain their property investments for the next 20 years or more.
• The average period that residential property investors expect to hold their property investment assets is 12 years.
• 49% of investors are considering purchasing additional residential property assets within London over the next 12 months.
• 22% of investors are looking at opportunities in the UK outside of the capital.
• 78% of respondents believe that London prices will be at current levels or higher by this time next year.
• For UK property outside of the capital, 49% expect prices to be at current levels or higher by this time next year.
• Landlords expect to see an average price increase of 1.48% by this time next year, twice the increase they were expecting last quarter (0.7%).
• The predicted 12 month outlook for UK property prices outside the capital is a fall of 0.58%, compared to the drop of 1.0% predicted last quarter.
• 94% of respondents expect the Bank of England base rate to be higher than the current all time low of 0.5% by the beginning of 2011.
• The average base rate expectation for Q1 2011 stands at 1.25%, up from the 1.1% predicted for Q4 2010 in last quarter’s Index.
• 93% of landlords believe that Estate Agencies should be regulated.
• 86% of landlords believe that individual estate agents should be subject to regulation.
• 68% of landlords believe that they themselves should be regulated.
• 84% of respondents believe that that a Conservative government would bring the greatest benefit to residential landlords.
• 13% of landlords expect a Labour government to create the right conditions for the private rented sector to flourish.
• 3% believe that the Liberal Democrats would be good news for landlords.

To view the entire Young Index Q1 2010 results, including price outlook, interest rate expectation and landlords’ views on regulation, visit: http://www.younggroup.co.uk/downloads/PrivateRentedSectorMarketUpdate.pdf

Related posts:

1. Property Owners Predict Small Base Rate Rise of 0.6% Through 2010
2. Base Rate Held at 0.5% but Property Investors Predict Base Rate of 1.2% by Q3 2010
3. Latest 12 Month Base Rate Forecast is 1.2%
4. UK Landlords are Regulation-Ready!
5. London’s Landlords Have an Unquenched Thirst for Investment