Growth figures cause clash of opinion in the city

“Should I stay or should I go” say the famous lyrics of a song by punk rockers; The Clash. It is a choice very rarely offered up to politicians or football managers, but is currently very much a question both landlords and tenants are asking themselves each day.

Many tenants are wondering whether to leave their tenancy now before their housing allowance is cut or whether to wait and see if their landlord offers them a cut in rent. Landlords are asking the same question about their portfolios, should they go out and buy landlord insurance on even more properties as rental yields still grow, or should they stay put and see what happens to the interest rates over the next few months. It is for sure the growth figures for the last quarter of 2010 announced yesterday will not have helped much in their calculations.

Will it affect Government policy?

The surprise return to minus growth figures has rocked the Government and shocked many financial experts. Although it is only -0.5% the figures have come as a great disappointment to Chancellor George Osborne. His assertion that the appalling weather in December definitely contributed to the bad result was somewhat belittled by financial commentators. The general feeling in the city was that in all probability even without the bad weather, economic growth would still have been at a standstill. The Government policy of cutting public spending quickly, suddenly looks more dangerous than ever.

The figures certainly threw a spanner in the works of those forecasting an early rise in interest rates. With the revelation that two members of the Bank of England Finance Committee had voted to raise interest rates this month the probability of a rate hike suddenly appeared on the horizon, the UK Pound gained ground against the Euro and the Dollar. That disappeared very quickly yesterday!

So what should a landlord do?

For those landlords looking to increase their portfolios then the likelihood of interest rates staying put, could convince them that now is indeed the time to expand their business. Cheap property insurance is still available for those who look round and nothing in the growth figures suggests there will suddenly be a dearth of tenants, indeed the opposite may well be the case.

In the end perhaps they should take heed of another song title from The Clash and maximise their “Career Opportunities”.

 

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