Falling borrowing costs following last week’s interest rate cut could improve affordability for UK homebuyers, landlords and investors but chronic undersupply means price pressures are likely to remain, a leading property expert has warned.
Mish Liyanage (main picture), chief executive of The Mistoria Group, says that the Bank of England’s decision to lower the base rate was “particularly significant for first-time buyers who have been sidelined by recent rate hikes”.
“With mortgage rates easing, we can expect a marked boost in affordability,” he adds. “However, supply constraints remain a critical barrier, and without more homes entering the market, price pressure will persist.”
According to official figures, about 124,000 new homes were built in England in 2024 – around 30 per cent below the government’s annual target of 300,000. The shortfall is most acute in high-growth areas, where both property prices and rents have continued to rise.
STRONG DEMAND
Liyanage says demand was likely to strengthen in cities such as Manchester, Salford and Liverpool, where prospects for capital appreciation and rental growth remains strong.
Landlords, he adds, stand to benefit from lower borrowing costs, particularly those buying through limited companies – now accounting for more than 70% of new buy-to-let purchases – which retain full mortgage interest relief and allow for easier portfolio expansion.
However, he cautions that the outlook for landlords is complicated by forthcoming regulation.
The Renters’ Rights Bill will introduce periodic tenancies, a national landlord register, stronger tenant protections and tighter eviction rules.
MORE COMPLIANCE
“Landlords need to prepare for increased compliance requirements in addition to better financing conditions,” he says.
Liyanage also says that the benefits of the rate cut would not be felt evenly across the country.
“Demand is recovering fastest in northern cities and university towns, while regions with weaker employment or ageing housing stock still lag,” he says. “Savvy landlords focus on cities with strong student populations, new infrastructure and robust local economies, where rental yields regularly exceed 7–8%.”
