Monday, Jul 03, 2017

Any minute now, rents will rise, promise!!

Torygraph: Attacks on landlords end up hurting tenants, says ex-Bank of England policymaker

Just goes to show the intellectual bankruptcy of neoclassical economics. Leases being signed now are subject to much higher taxation for the duration - why are landlords not passing this on as threatened, and are instead accepting lower rents than before? And why are rents lower in the US, where the average ad velorem property tax bill paid by the landlord is $6000 vs £0 in the UK?

Posted by mombers @ 11:36 AM (2295 views) Add Comment

4 Comments

1. icarus said...

“Making rental property more expensive, as is very likely if you reduce the attractiveness to suppliers of rented property,...... (will) make rents even higher"

Next day the professor got out of the other side of the bed and said:

"Scrub what I said yesterday. Suppliers alone don't control prices (see mombers' intro.), and making property speculation less attractive could dampen property prices and enable FTBs......... (cont. p94)."

Monday, July 3, 2017 12:56PM Report Comment
 

2. sneaker said...

So who are all these mystery tenants to whom price-rises can be passed on?

You can only pass a price-rise on to a customer if they have enough spare cash to deal with it.

But since everyone is skint, inflation is soaring and real wages are under a vicious squeeze, price-hikes won't work.

If prices go up, everyone will just watch and go "oh". And then "well I can't afford that, so I'll go elsewhere.'

All you'll end up with is empty apartments.

The BoE doesn't appear even to understand the Price Elasticity of Demand, let alone that markets are dynamic, that marginal factors don't operate in a vacuum, that the economy is an ecosystem not a Newtonian machine nor even the current macroeconomic environment.

Why do they get to keep their jobs when they don't even know their subject? Or has El Gringo de Naranja finally proven once and for all that while most people need to be qualified for their jobs, beyond a certain level jobs go to people who are profoundly unqualified almost as a badge of honour.

Amazing times we live in.

Monday, July 3, 2017 01:40PM Report Comment
 

3. britishblue said...

I don't seem to remember buy to let landlords scrambling to reduce rents when interests rates dropped. Landlords will charge what the market will take. In London the market can't take any more and rents are falling.

Monday, July 3, 2017 09:37PM Report Comment
 

4. mombers said...

@3 exactly - can never get an answer out of BTL brigade on this one. I have personal experience of this with 2 BTL mortgages in South Africa - where rates rise and fall at a much, much higher frequency than the developed world. No chance of changing rent when base rate changed..

Tuesday, July 4, 2017 09:19AM Report Comment
 

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