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Categories: government and politics | prs | property market
With so much uncertainty in the global economy, landlords may be apprehensive about making big investments until the climate changes. However, there are signs of positive activity in the private rental sector (PRS).
From regional market boosts to an influx of low rate products, there are plenty of opportunities for private landlords to take advantage of. Now is as good a time as any to secure a great mortgage deal.
High-end London rentals grow in popularity
Many high-income earners are leaving the UK in protest of the non-dom tax regime changing. Both the current Labour government and the previous Conservative government promised to abolish non-dom tax status for UK citizens permanently living abroad for tax-reducing purposes.
However, there is still faith in the UK private rental sector (PRS). Reports from Garrington Asset Management indicate that wealthy London property owners are choosing to rent out their properties rather than sell their homes.
Prime central London is a hub of activity, as data from LonRes shows that average rent agreed on flats in prestigious, urbanised neighbourhoods increased by 7.9% in the first three months of 2025. Average rental values of flats in these areas are now 11.3 higher than they were in 2024.
Jonathan Hopper of Garrington gave a hypothesis to explain the behaviour of private landlords in London:
Rising taxation and political uncertainty have led many wealthy UK residents to reassess their presence here, and a rapid recalibration of London’s prime property market is underway.
Some of those leaving Britain have chosen to sell their London homes, but we’re starting to see a strategic shift as others retain their UK property assets and turn to the increasingly attractive lettings market instead.
Prime rental values in London are now a third higher than their pre-pandemic average, and while our high and ultra-high net worth clients may have lost faith in the current government’s fiscal direction, their faith in prime UK property as a reliable, long-term asset remains as strong as ever.
UK markets resilient in face of uncertainty
The impact of international politics is currently a major concern for everyone. Donald Trump’s tariff policies have unleashed a “major negative shock” on the world economy according to the International Monetary Fund (IMF), slowing expectations for growth for many countries, including the US.
However, some economists have predicted that the international tariff war may ironically benefit mortgage borrowers.
An investment analyst from AJ Bell said:
Interest rate expectations are falling as markets price in the potential economic damage from US tariffs, and the likelihood the Bank of England will respond with interest rate cuts.
Speculation on the future of the Base Rate has largely been in favour of further cuts occurring throughout the year. However, the rise in inflation at the start of the year caused some to re-evaluate the Bank of England’s approach to the Base Rate, and if they risk inadvertently destabilising inflation.
The Bank of England ran a series of stress tests on the UK’s major banks to see if they were resilient enough to withstand adverse market conditions, proving that they are taking economic stability very seriously.
Though nothing is guaranteed, current predictions lean towards a Base Rate cut at the end of the month. A gradual reduction in Swap Rates (which reflects the actual overnight interest rates between major banks) also points towards this possibility.
As such, some lenders are withdrawing products and releasing more competitive rates. Case in point, there are now several products with sub-2% rates. Depending on the Bank of England’s next moves, these may not last forever. As we have seen, Base Rate cuts does not necessarily mean lenders will continue to cut rates.
Don’t delay – explore great mortgage options by contacting us today.
