UK Treasury Secretary Rachel Reeves is considering freezing rents to curb the negative economic effects of the war in the Middle East.
The UK government is easing the impact of the Washington-Tehran conflict on the British property market
The Guardian reports that the above decision is extraordinary and serves to protect British households whose spending has risen with the escalation of the conflict between the United States and Iran.
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Reeves, in line with the planned cost‑of‑living relief package to be announced soon, may decide on a year‑long rent freeze in the private sector.
In practice this would mean that UK apartment owners could not raise rents for a set period.
“In the face of expected severe losses for the Labour Party in local elections, Keir Starmer’s weak position as prime minister and economists’ forecasts of a sudden inflation surge, ministers are seeking immediate solutions that would ease the burden of living costs for voters,” reports The Guardian.
The measures the UK government is working on are receiving mixed reactions from experts.
Supporters of the changes emphasize that they could help solve the housing affordability crisis, providing rent cost stability when households struggle with high energy and food expenses.
Opponents argue that regulations could discourage developers from building new homes, which in the long run could deepen the shortage of available housing.
“The finance minister is expected to exclude newly built properties from the freeze to encourage developers to continue work on new projects,” says The Guardian.
The Treasury refuses to comment on “speculation”, but the ongoing stalemate in the Middle East forces the UK government to act in response to current economic risks.
“In an uncertain and unstable world, it is the duty of my government to protect Britons both at home and abroad,” said Keir Starmer, British prime minister, quoted in an official statement on March 31.
“I know the public is worried about the conflict in Iran and what it means for them and their families. I want to assure them that the government is on their side, working with allies to ease tensions and reduce living costs,” he added.
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BoE will hold off on rate cuts, says well‑known bank
The Bank of England will announce its decision on interest rates on Thursday.
Analysts at ING Think, like most of the market, expect a cool tone from decision‑makers, who, assessing the war’s impact on the Middle East, will refrain from both easing and tightening monetary policy.
“We expect the Bank of England to keep rates unchanged with an 8‑to‑1 vote,” they said.
“Chief Executive Andrew Bailey said at the beginning of April that markets are ahead of reality on rate hikes. However, given the persistent high uncertainty and the likelihood that clearer divisions will emerge in the committee next week, we doubt the Bank will want to risk even more, opposing market valuations,” they added.
Source: Trading Economics.
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Source: The Guardian, UK Government.
