UK interest rates have historically tracked inflation at around 1.5 times inflation.

At this rate we should expect interest rates to rise considerably.

Add in a 1% margin for the banks over the base rate and you could be looking at around 8.5% interest rates.

Anyone still see UK BTL as a good investment?

Hi Tom,

You seem well informed about historical data, but I think the game has changed. The B of Es message yesterday was clear that they will try everything possible to curb inflation pressures and interest rate rises will only be a last resort. After all Interest rate rises will probably tip us into a real recession and not the so called "pinch" or "crunch" which we are currently experiencing.

BTL has always been a long term venture for 10 years plus and since there is still a massive shortage of housing I will be riding out the current storm.

Alan,

What can the BoE do except raise or lower interest rates? Nothing.

My point is that inflation will continue to rise and hence interest rates must also rise. There is an uncanny relationship between inflation and interest rates over the course of history.

The UK can do nothing to curb inflation. We are in a commodity super cycle based on supply and demand fundamentals. Inflation will continue to rise.

The one place I don't want to be invested in a slowing economy and rising costs is UK property.

Tom,

I agree with you, I would not want to be invested in the UK property market right now. The problem is I am am, and like most people with BTLs the issue is can I now justify selling up to get out.

I think I have already missed the boat as far as selling up goes. Prices are already off by a least 10% and, with the exit and re-entry costs, unless you believe property really is going to decline by over 25% from its 2007 peak hanging on in is now probably the better option.

Regards

Alan