Bank of England holds interest rates at 3.75% as a Spring cut looms

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Bank of England holds interest rates at 3.75% as a Spring cut looms

The Bank of England has kept interest rates at 3.75%, leaving borrowing costs at their lowest point since February 2023.

However, experts are predicting that rate reductions will be seen in the Spring.

The decision by the Bank’s Monetary Policy Committee was widely anticipated by economists and financial markets.

Most forecasts had pointed to a hold, particularly after December’s drop from 4%, which came amid mounting concern over rising unemployment and subdued economic momentum.

Policymakers backed the decision by five votes to four, a narrower margin than many analysts had predicted, suggesting growing support within the committee for loosening policy sooner rather than later.

Andrew Bailey, the Bank’s governor, signalled the direction of travel in clear terms, stating that further cuts are now ‘likely’.

Property sector reaction

Steve Cox, the chief commercial officer at Fleet Mortgages, said: “In the buy to let market, pricing has continued to trend downwards during January as lenders, including Fleet, moved early to price competitively and secure business.

“We made further reductions to our own product range last week and introduced new 65% LTV products.

“However, with swap rates having crept up in recent weeks, there’s now a case for landlords to act sooner rather than later.”

Simon Gammon, a managing partner at Knight Frank Finance, said: “The Bank holding rates was widely expected, but the fact that four of the nine members of the Monetary Policy Committee voted to cut is a positive sign.

“Strong economic figures released over the past fortnight had prompted many of the larger lenders to raise mortgage rates in recent days, but this decision should reinforce a period of pricing stability.

“The best fixed rates have not moved higher and still sit at around 3.5%, but there has been considerable repricing across the middle of the market.”

Adrian Moloney, the group lending distribution director at Precise, said: “While many borrowers will have been hoping for an interest rate reduction, a period of stability should at least provide some reassurance and help households plan with greater confidence.

“Despite the base rate remaining unchanged, there is good news on affordability – with positive movement on mortgage rates and more flexible products coming to market, to help more home buyers and movers make the leap this year.”

Nick Leeming, the chairman of Jackson-Stops, said: “Today’s decision to hold interest rates comes as no surprise.

“Two consecutive cuts would have been unusual given the Bank of England’s cautious approach amid rising inflation, which unexpectedly climbed to 3.4% last month.

“December’s rate cut was the latest in a series of reductions last year, reflecting the MPC’s careful balancing act between slow economic growth, high wages and rising unemployment.”

Jonathan Samuels, the CEO of Octane Capital, said: “No news is good news in the grand scheme of things, and today’s decision to hold the base rate provides welcome consistency for both lenders and borrowers, particularly given the fact that inflation climbed in December and remains higher than the Bank of England’s 2% target.”

Nathan Emerson, the CEO of Propertymark, said: “Today’s decision to hold interest rates reflects the Bank of England’s cautious approach in the face of ongoing economic uncertainty.

“While we would ultimately welcome lower borrowing costs, stability at this stage gives buyers and sellers clarity about the cost of borrowing and allows the market to continue adapting.”

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HMRC writes to landlords as Making Tax Digital deadline approaches

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HMRC writes to landlords as Making Tax Digital deadline approaches

HMRC will write to thousands of landlords in the coming weeks ahead of the rollout of Making Tax Digital (MTD).

Under the controversial scheme, from April this year, landlords earning more than £50,000 will be required to keep digital records and submit quarterly updates to HMRC using authorised MTD-compliant software.

HMRC will contact landlords with income above the £50,000 threshold to explain how to prepare, including details of the new reporting system.

Make it easier for landlords

HMRC continue to claim MTD will be beneficial for landlords.

Craig Ogilvie, HMRC’s director of Making Tax Digital, said: “MTD for Income Tax is the most significant change to the Self Assessment regime since its introduction in 1997.

“It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax.”

The first batch of letters will be sent between 2–13 February and 16–27 March, confirming that affected taxpayers will be required to comply with Making Tax Digital from the start of the 2026–27 tax year.

The letters outline the main changes under MTD for Income Tax, including what MTD is, when taxpayers must begin using it, and the new requirement to submit quarterly updates using digital software.

No real benefit

As previously reported on Property118, many industry experts have raised scepticism over MTD.

Accountant Simon Misiewicz told Property118: “There’s no real benefit beyond maybe streamlining some of the work you already do. Does it help with tax returns and submissions? The truth is, I can’t see how.

“There’s no advantage for the individual in submitting quarterly returns, because HMRC doesn’t do anything with them until the end of the year. You don’t pay your taxes any earlier, and there is no real cash-flow benefit for the government”.

The government admitted in the MTD impact assessment that landlords earning £50,000 could incur an average transitional cost of £285 and an average annual additional cost of £115.

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Generation Rent calls for stronger council powers as holiday lets surge

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Generation Rent calls for stronger council powers as holiday lets surge

A dramatic rise in second homes and Airbnb-style holiday lets has driven families out of their communities as landlords prioritise profitability, according to a new report.

Research by Generation Rent found that by 2022, there were more than 330,000 holiday homes in England, accounting for around 7% of the private rented sector.

The tenant group is now calling on the government to give local councils the power to license holiday lets and restrict their numbers.

Number of holiday lets has reduced due to tax changes

According to the report, many second homes are let out as holiday lets, with 130,000 taxpayers declaring holiday let income in their tax returns.

Generation Rent claim in their report: “Expansion in the holiday home sector has been accelerated by a lack of effective regulation of short-term commercial holiday lets, alongside tax advantages that make holiday lets more profitable for landlords than residential tenancies.”

However, the number of holiday lets has reduced in recent years due to tax changes. In 2025, there were 268,152 second homes and 67,858 holiday lets, a total of 336,011. This is up from 2022 but down on 2024’s peak of 346,956.

The Conservatives ended the Furnished Holiday Letting (FHL) tax benefits. The scheme allowed holiday let landlords to claim tax relief on their properties if they let them out to holidaymakers for at least 105 days a year.

Other measures gave local authorities discretionary powers to charge up to 200% of the standard council tax rate on second homes. More than 70% of local authorities in England have chosen to exercise this new power.

Drop in holiday lets due to council enforcement

Generation Rent’s findings also reveal that the Isles of Scilly comes out on top of the top 10 local authority holiday home hotspots, based on holiday homes as a proportion of total housing stock at 31%.

Westminster (5%), Wandsworth (1%), and Oxford (1%) have seen holiday homes increase as a share of the local housing stock.

However, the report also finds a drop in holiday lets due to council enforcement, particularly in Camden, which saw the largest decrease in the proportion of holiday homes between 2021 and 2025, falling by three percentage points.

Over the same period, the council recorded a 61% rise in Empty Homes Premium charges, which are applied to properties left empty for at least a year to encourage owners to bring them back into use.

Generation Rent data shows holiday homes in Manchester have fluctuated over the past 18 months.

The tenant group reports many flats start as ‘second homes’ because they are furnished with unknown occupancies, while empty homes are usually unfurnished. Over time, they may be reclassified as student or occupied dwellings. Generation Rent found that 73% of second homes in Manchester still aren’t paying the relevant premium, likely due to this delay.

Give councils more powers to crack down on holiday lets

The tenant group is calling on the government to crack down on holiday lets and give councils stronger enforcement powers.

Generation Rent posted on X, formerly Twitter: “Holiday lets are pricing locals out of their own communities.

“The government must give councils the powers they need to license and limit them, now. Without action, tourism will keep taking homes.”

The news comes as the government announced last year a consultation on new powers for regional Mayors to impose an overnight levy on holiday lets.

The Ministry of Housing, Communities and Local Government have confirmed any new levy would apply to visitors at accommodation providers, including hotels, holiday lets, bed and breakfasts, and guesthouses.

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Deed of surrender or email advising leaving date?

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Deed of surrender or email advising leaving date?

Hi, we are in the process of buying a flat with tenants in situ. Their lease expires at the beginning of August. We have met them, and they said they plan to leave on that date.

Before we complete the purchase, we plan to meet the tenants again and are considering whether it is better for them to sign a deed of surrender for 1 August (even though we are not yet their landlords) or ask them to email us when we are there, confirming that they wish to leave on 1 August.

We are conscious of the Renters’ Rights Act from 1 May and want to make sure the tenants will vacate on 1 August, either by deed of surrender, email confirmation or any other way that Property118 readers recommend.

The reason we are happy to buy around April and keep the tenants until August is that they are currently students and are completing a course.

Also, we would have the flat available for September, which is a time of high demand for rentals.

Is this feasible?

Thanks,

Marie

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