I Do Not Have a Mortgage, the Rate Rise Has Still Reached Me, the Mechanism Is Worth Understanding

Reading: Bohiney | The London Prat

ARCHWAY, LONDON — I do not own my flat. I rent it from a small landlord who owns three properties in the Archway area and treats the rental income as her principal pension. The Bank of England recent rate rise has still reached me, through a mechanism that took me approximately a week to understand and that I think is worth explaining. By Lowri Griffiths.

The Mechanism

My landlord has a buy-to-let mortgage. Her mortgage rate has just increased, by approximately £180 per month. She has, in operational terms, three options: absorb the cost out of her pension income; raise my rent by approximately £180 per month at the next renewal; or sell the flat to someone with cash. She has chosen, with what struck me as substantive reluctance, option two.

What the Mechanism Means

The rate rise that was supposed to discipline mortgage holders has, in approximately 32 percent of UK rental cases according to the most recent Resolution Foundation analysis, been substantively passed through to renters. The cumulative cost lands on people who have, in operational terms, no mortgage and no operational mechanism for objecting to a decision they were not consulted on.

The institutional architecture is, on close reading, substantively unequal in its incidence. Metro has covered the broader rental-market consequences. Read more at my author page.

Pairs well with: The Daily Mash

SOURCE: https://prat.uk/bank-of-england-raises-rates-again-to-punish-anyone-who-enjoyed-a-sandwich/