Early-rising listeners to The Today Programme this morning will have heard the segment looking ahead to today’s interest rate decision and what course of action would be best for UK Plc.

Fathom Financial’s Danny Gabay made the case that not only had historically-low interest rates of 0.5% saved us all considerable pain, but continued to be necessary if the UK was to avoid another worsening of economic conditions. However, Dr Peter Warburton of Economic Perspectives feared that such low interest rates, especially when combined with the £200 billion programme of quantitative easing, provided “a threat of persistently higher inflation”.

Only time will tell which of these views is correct – although the MPC’s decision to hold interest rates at 0.5% certainly suggests they agree with Danny Gabay – but are there wider risks to the housing market with both proposed routes?

Something that the Bank of England has been criticised for is the age of cheap money in the years before the crash, leading to a property bubble that proved to be toxic for nearly all involved.

Could it be that the same is happening now? House prices may have dipped slightly in February, but prior to this they had grown every month since June 2009 and are now around the same level as in August 2008.

But is the threat of a property bubble significant enough for interest rates to be increased? Such a move, if premature, could be disastrous for consumer confidence and effectively kill off any recovery before it has properly taken root.

Yet again the connection in the British public’s mind between rising house prices and actual wealth is causing headaches for the MPC as it looks to find the safest course through the current troubles.

A move to a renting society such as Germany – where peaks and troughs in property prices are much shallower – may be the only way for such a connection to be broken.

And for that Mervyn King and his fellow MPC members would be forever grateful.

Listening to Mervyn King’s appearance in front of the Treasury Select Committee on Tuesday, complete with warnings about the fragility of the ‘nascent recovery’ and the possible reintroduction of quantitative easing, I started thinking about the next generation’s relationship with money.

Anecdotal evidence suggests that people’s attitudes to money and debt are shaped by experiences in their youth. A quick comparison of the World War Two generation with ‘baby boomers’ – the first group to really embrace home ownership – effectively demonstrates the difference between growing up in the prosperous 1960s and the depression-hit 1930s. Take it a stage further to those born in the ‘loadsamoney’ 1980s and the contrast is starker still.

This is backed up by research which suggests that people’s outlook is most susceptible to the effects of recession between the ages of 18 and 24. So can we expect the next generation of graduates to be committed savers, avoiding debt where at all possible? And if so, what effect will this have on the wider economy?

Logic suggests that a more debt-averse culture will see people hold off buying homes until they are comfortable with the debt as a multiple of their income. A depressed employment market – and there is enough slack in the system to ensure that promotions and pay rises will be at a premium for the next few years – will see house purchases delayed further still.

Which brings us back to a familiar theme, namely the UK’s need for a professional rented sector. With people waiting longer before buying, they need somewhere to live and institutional involvement is surely key to this provision.

After all, the next generation can’t all live with their parents.

When I was a teenager, as a result of my father’s job with the aerospace company Boeing, my family moved from Gloucestershire to Seattle in the US.

While such a move wasn’t unheard of it was certainly rarer than it is today, with neighbours’ comments on our relocation invariably featuring the phrase “very brave”. Compare that to the experience of a friend of mine who has just emigrated to Melbourne; almost without exception, people’s first reaction to being told was to ask when they could visit.

What these different attitudes show us is how much more mobile today’s population is and how spending some time living abroad is increasingly considered a rite of passage. But how will this impact on the UK’s residential market?

As people put a premium on flexibility and being able to up-sticks at the drop of a hat, will they look to rent rather than buy? Around 68% of homes in the UK are owner-occupied, falling from 71% six years ago. Not a massive drop I agree, but this could be a pointer as to the way things are headed.

Of course, many of our European neighbours already have well-established renting cultures. More than 60% of the German population rent rather than own their home, a situation that has led to a less volatile property market.

So could the UK ever see rental levels similar to our German cousins? Possibly, but this is only likely to happen with the advent of a large-scale, fully-formed professional rented sector. The irony is, of course, that a more stable market would be of greater attraction to the institutions, but such low-volatility is unlikely to be realised until they commit to the sector en masse.

There’s more than a little bit of the-chicken-or-the-egg about this scenario, and it will be fascinating to see which happens first in the coming years.

As the MPs’ expenses scandal continues to rumble on, I’ve been thinking about second homes and furniture and how the system can be changed to offer better value to the taxpayer.

MPs from outside of the South East should of course be reimbursed for their London pied-à-terres, but with second home costs running to £10.5 million per year, there is clearly a case to be made for finding a better way to manage the situation.

Much of the public’s irritation comes from MPs being allowed to keep any property purchased once their time in Parliament comes to an end. A portfolio of flats or
serviced apartments owned by the Government would provide a base in Central London while at the same time ensuring taxpayers – and not individual MPs – benefit from property ownership and a rise in prices.

And what about the furniture? According to The Guardian website, MPs spent a total of £481,845 – equivalent to £746 each – on furnishings during the financial year 2008/09. By way of comparison, furniture rental for a one-bedroom flat from Roomservice by CORT comes in at £429 a year based on a five-year contract, which coincidentally happens to be the typical length of a parliament.

So will we ever see the day when MPs are allocated a room at a Government-owned hall of residence, à la students on their first day of university?

Perhaps not, but surely the opportunity exists for a private sector landlord to fulfill the same role? If I had a vacant plot of land in Westminster, it’s certainly something I would be considering . . .

Housing minister John Healey’s proposals for increasing the practical help and protection available to tenants, as outlined yesterday in the Communities & Local Government report “The Private Rented Sector – Professionalism and Quality”, have got me thinking.

The plans, including the introduction of a housing advice hotline, a ‘tripadvsor.co.uk’ style website and a National Register for Landlords, will help tenants not only when choosing where to live, but also if they face issues during their tenancy.

But is one of the best ways of achieving these goals being overlooked?

One of the benefits of increasing the role of institutions in the private rented sector is that they can provide a level of customer service and tenant protection that, in the majority of cases, exceeds what is currently available. Economies of scale would give them the means to do this and the need to build a trusted, reliable brand provides the motivation.

Widespread institutional investment in the sector would also help to build realistic expectations – from both parties – as to exactly what the responsibilities of a tenancy agreement involve. Throw in the effect of institutions’ service levels forcing smaller-scale landlords to ‘up their game’ and tenants would be better protected across the board.

In John Healey’s own words, the motivation behind the new proposals is that “Every tenant should be confident in their decision to rent as well as be clear what to expect before they sign on the dotted line.”

The plans he has outlined will certainly help to meet this aim, but could better encouragement of institutions’ involvement in the sector achieve more with less?

Having spent Wednesday at the BPF Residential Conference in The City, an event which Roomservice by CORT sponsors, I must say how pleasing it was to encounter some optimism, albeit cautious, in the industry.

A well-organised conference saw sessions devoted to the outlook for the economy, the role of property derivatives in mitigating development risk, opportunities in the intermediate market and the preservation of the buy-to-let market with more sophisticated players (as I wrote about last week). Although there was nothing to encourage delegates to put a deposit down on a new Ferrari in anticipation of the good times, the mood was at least positive for the first time in a few years.

Further conversations about development options, especially in the affordable sector, were as encouraging, although we were all brought down to earth with the keynote address from Campbell Robb of homeless charity Shelter. The lack of basic accommodation means that the less fortunate in society are now more vulnerable than ever. As bad as things have been in the residential sector, Campbell gave us all a reminder that it could be much worse.

If British Land is dipping its toe in the buy-to-let market, as I wrote about last time, are we soon to see the return of the private residential investor?

Following the news that the number of buy-to-let mortgage products available has fallen by 93% in the past 18 months, I’ve been running this question through my mind over the past few days and, I’m afraid, am yet to come up with a definitive answer.

On the face of it, the buy-to-let investment model could be on the cusp of a renaissance. With house prices seeming to have turned a corner, and with yields available over and above the cost of borrowing, there are undoubtedly a lot of investors out there who think residential property is worth a punt. For the first time in a few years, the buy-to-let game has become more than just a capital appreciation play.

But of course there is the hurdle of a lack of available finance. Will lending conditions ever improve to the extent that we will see the return of the buy-to-let market as we knew it during the boom?

Investors with significant equity, good knowledge of the property industry and an understanding of effective asset management are out there as I write, identifying opportunities and acting on them. Such ‘professional’ investors will always be popular with the lenders.

But where this leaves the amateur investor is anyone’s guess. Banks aren’t keen to lend to such investors – especially at the LTV rates of old – and with many of them shouldering mortgages on their family homes, servicing these will inevitably take priority over speculation.

But what about those in the middle, the investors with existing holdings who will be looking to remortgage in the coming months and years? With fewer financial products available, remortgaging is going to be substantially more difficult than before the downturn.

With a relative lack of competition, banks that are in a position to offer these investors mortgages could find themselves making considerable profits on the back of a rising residential market. But the question remains: do the banks have the appetite – or the resources – to loosen the purse strings and let a bit more money flow into buy-to-let?