UK Inflation is at its highest rate for 30 years, having risen to 5.4% in the 12 months to December  - and is forecast to rise to around 6% in April this year.  The Bank of England finally raised base rate to 0.25% in December,  with a gradual rise in 2022 likely, as a brake on inflation. The main drivers of the high inflation rate (against a BoE target of 2%) are the lagged impact of increased energy and gas prices, alongside increased supply side costs due to Brexit/COVID. 

Against the rising cost of living, workers are seeing real wages fall, and are adjusting their lifestyles.

 In the rental market, rent levels continue to rise, especially in areas outside of London, driven by continued increased demand, and lack of supply. It will be interesting to whether demand  holds, given the cost of living squeeze that many households are experiencing.  Similarly, developers are facing higher supply side costs especially in construction costs and costs of borrowing are likely to need to be factored in.

After the success of the multi family BTR model, developers are expanding into single family models - different locations, often more rural, focussed on community amenities and offering a longer term tenure. Typically rents are more affordable (set at a more modest premium to market)  - as single family schemes tend to be less amenity heavy, and are not city centre based. This "next step on" model is a welcome addition to the BTR family. It will be interesting to see what impact the increased cost of living has on the rental market generally, and how the single/multi options play out.