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Telegraph Rant Piece Against Rent Control

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Article.

Executive summary: advocates of rent control and opponents of BTL are characterised by 'economic illiteracy, an antiquated, quasi-Victorian class hatred of landlords, generational strife and downright incomprehension.'

Interestingly, the comment I posted must be approved by a moderator. I'd be very surprised if it appears...

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Article.

Executive summary: advocates of rent control and opponents of BTL are characterised by 'economic illiteracy, an antiquated, quasi-Victorian class hatred of landlords, generational strife and downright incomprehension.'

Interestingly, the comment I posted must be approved by a moderator. I'd be very surprised if it appears...

If you register a Discuq (assuming you don't want to use FB or Twitter) then your comments should appear instantly.

But yes, rent control is silly, getting supply into the market (including allow people to build) or building social housing (just adequate, but nothing luxurious) to compete down the rent is the way to go. It did not go well the last time they did rent control and that was the reason they abolished it.

Edited by easy2012

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Article.

Executive summary: advocates of rent control and opponents of BTL are characterised by 'economic illiteracy, an antiquated, quasi-Victorian class hatred of landlords, generational strife and downright incomprehension.'

Interestingly, the comment I posted must be approved by a moderator. I'd be very surprised if it appears...

I would say the quote you posted pretty much sums up rent control as an idea.

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Why join two very different issues together?

Rent control is obviously favoured by the barking at the moon types, but the issue of BTL is far more nuanced.

Friends recently moved to Germany, and in the city they live in, landlords are restricted in how much they can raise the rent year on year. I believe the max increase allowed per year is 1%. Isn't this a form of rent control? And if so, and if rent control is such a terrible concept, why do we never hear horror stories from Germany about how awful this system is?

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Friends recently moved to Germany, and in the city they live in, landlords are restricted in how much they can raise the rent year on year. I believe the max increase allowed per year is 1%. Isn't this a form of rent control? And if so, and if rent control is such a terrible concept, why do we never hear horror stories from Germany about how awful this system is?

Ah but it's only "awful" if you're a sponging rent-seeker who wants to build a BTL "portfolio", aided and abetted by some dodgy HSBC drug money mortgage finance.

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I believe the max increase allowed per year is 1%. Isn't this a form of rent control?

Yes.

And if so, and if rent control is such a terrible concept, why do we never hear horror stories from Germany about how awful this system is?

If Germany has sustained inflation at > 1% there will be plenty of horror stories, though you may not get to hear them from the UK media.

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Friends recently moved to Germany, and in the city they live in, landlords are restricted in how much they can raise the rent year on year. I believe the max increase allowed per year is 1%. Isn't this a form of rent control? And if so, and if rent control is such a terrible concept, why do we never hear horror stories from Germany about how awful this system is?

That is why German apartments comes in as bare as possible and the tenant have to install their own kitchens etc (which they stripped off when the move on).

Further... not sure what you say is correct given: http://www.globalpropertyguide.com/Europe/germany/Landlord-and-Tenant

Rents and rent increases can be freely negotiated and agreed upon. However the landlord can be fined if, in a time of limited housing accommodation, he demands rent in excess of 20% above the rent charged for comparable premises.

The contract may contain:

Graduated rent increase clauses, or

Indexation clauses

Perhaps the main reason German rents is that they can't get easy mortgage + liar loans (though Germany bank proved willing to buy liar loans from Greece, US, UK etc)?

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Ah but it's only "awful" if you're a sponging rent-seeker who wants to build a BTL "portfolio", aided and abetted by some dodgy HSBC drug money mortgage finance.

Even a top-hated swivel moustached "sponging rent-seeker" will eventually stop renting their properties if there's no profit in it.

That may be a good thing if you want to buy property, less so if you need/want to rent.

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The problem is supply of housing, not the price, which has risen in response to a lack of supply.

Rent/price controls are tried every now and then by left-wing governments as a silver bullet to some such problem, and they always cause more trouble than doing nothing at all, usually by restricting supply or causing quality to fall.

Price controls are the response of the economically illiterate.

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The fundamental problem with price controls is that they attempt to treat the symptom of a problem and not the cause. Statist governments keep introducing such measures because they believe you can legislate yourself to utopia. History tells us they are wrong.

Example of price controls not working: Wine whine

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Rent control is silly but is comparable with fixing the prices of property by various government schemes, but this is seen as being acceptable and indeed favoured by the majority of the population who love high house prices.

10 sillies do not equal one smarty :-)

Not sure if it is accepted by the population or just accepted by the only 2 parties (+1 minor) available to be elected (and their friends).

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The worst kind of rent control is that of perpetually high rents caused by perpetual subsidy of private landlords by local tax payers. Building millions of new council houses would be paid for in a decade or so and relieve tax payers of a good deal of the burden of supporting the unemployed forever.

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The worst kind of rent control is that of perpetually high rents caused by perpetual subsidy of private landlords by local tax payers.

Maybe not the worst kind, but it definitely rates a 'silly'.

Building millions of new council houses would be paid for in a decade or so.

The residents of subsidised housing are by definition not able to pay the market rate, so I suggest your pay-back period would need to be extended indefinitely.

And relieve tax payers of a good deal of the burden of supporting the unemployed forever.

More likely it will just increase the number of welfare dependants.

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That is why German apartments comes in as bare as possible and the tenant have to install their own kitchens etc (which they stripped off when the move on).

Further... not sure what you say is correct given: http://www.globalpropertyguide.com/Europe/germany/Landlord-and-Tenant

I don't know if the situation is the same all across Germany, this has come straight from the horse's mouth from some friends that have moved to Berlin.

The apartment they live in has all necessary fixtures and fittings, and they love it. The did not have to install their own kitchen, bathroom, or anything of that nature. They have done the place up, which they were happy to do. They moved there from London, and are paying less than half the rent they were paying in London, for a two bed place (in London they had a one bed and were paying around £1000).

Haven't got too much time to check up on figures but did find this interesting blog:

http://www.macrobusiness.com.au/2011/06/how-germany-achieved-stable-affordable-housing/

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Maybe not the worst kind, but it definitely rates a 'silly'.

The residents of subsidised housing are by definition not able to pay the market rate, so I suggest your pay-back period would need to be extended indefinitely.

More likely it will just increase the number of welfare dependants.

I don't know if it would increase the number of welfare dependants. I grew up in a town in which many professional and other working people occupied council houses for most of their lives. A helping hand in increasing supply in the area of housing would be a good thing IMHO and it would stimulate the economy in so many other ways because of the knock on effect that local tax payers having more spare cash each month to spend on things other than housing. Once a house has been paid for, its only ongoing expenses are for maintenance and periodic upgrades to things like windows and heating. This enables rents to be kept low. The ultimate and least deserving beneficiaries of high housing costs are the banks. I know that so many on here are ideologically opposed to the idea of anything being owned by the state but all the time the government selectively interferes in free markets, then measures such as artificially increasing supply become necessary.

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The problem is supply of housing, not the price, which has risen in response to a lack of supply.

Rent/price controls are tried every now and then by left-wing governments as a silver bullet to some such problem, and they always cause more trouble than doing nothing at all, usually by restricting supply or causing quality to fall.

Price controls are the response of the economically illiterate.

QE aims to control price...of housing and other assets...that makes the CBs economically illiterate.

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I don't know if the situation is the same all across Germany, this has come straight from the horse's mouth from some friends that have moved to Berlin.

The apartment they live in has all necessary fixtures and fittings, and they love it. The did not have to install their own kitchen, bathroom, or anything of that nature. They have done the place up, which they were happy to do. They moved there from London, and are paying less than half the rent they were paying in London, for a two bed place (in London they had a one bed and were paying around £1000).

Haven't got too much time to check up on figures but did find this interesting blog:

http://www.macrobusiness.com.au/2011/06/how-germany-achieved-stable-affordable-housing/

Edit: when I say they did the place up, I mean that they painted it. Nothing more than that.

The only reason I bothered to post about is because articles like that Telegraph article remind me of US articles from people that are against a national health system. They just highlight the notorious failures, the systems that didn't work - i.e New York. In fact in Germany they seem to have a system of rent controls that has been working pretty well for quite some time.

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The ultimate and least deserving beneficiaries of high housing costs are the banks.

I agree, though I'd grudgingly point out that banks do employ a lot of people.

I know that so many on here are ideologically opposed to the idea of anything being owned by the state but all the time the government selectively interferes in free markets..

It's not ideological; governments, at least UK ones, make things worse as often as they make things better. They really need to stop thinking they are omniscient and omnipotent, particularly as we tax-payers tend to suffer the consequences.

then measures such as artificially increasing supply become necessary.

Why not just stop with the interfering and see what happens?

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Rent Control is the knee-jerk reaction the elites want the proles to talk about, as it's easy to see why it wont work, but it keeps them from demanding the real problem be addresses.

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And the best way to control house prices is via taxing unearned gains away (an LVT)

You've just pointed out that prices increased due to loose credit and not the lure of easy capital gains, so LVT probably isn't the solution (at least to this problem).

or via credit controls

I think this is the key issue, but it is clearly a political hot potato.

They could go back to having no BTL mortgages like not so long ago. I don't see any expansion in the housing supply as a result of this financial innovation. They have used it to corner the existing market.

All good points, but I wonder how much of the BTL expansion was actually credit driven? The (few) people I know who rent out property seem to treat it as a form of long-term savings account.

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...

The residents of subsidised housing are by definition not able to pay the market rate...

...

The subsidy increases the 'market' rate, so I'm not sure that's true. In other words, housing benefit probably doesn't make it much easier for people to get housing.

All good points, but I wonder how much of the BTL expansion was actually credit driven? The (few) people I know who rent out property seem to treat it as a form of long-term savings account.

The popularity of BTL mortgages suggests 'a lot'. To be honest, I think almost every economic development since about 1997 was credit driven, ultimately.

As for the OP, you probably could make rent controls work, if you also had some kind of price controls as well. On the other hand you'd probably ****** it up, and cause more problems than you'd solve. It's a bad solution to an artificial problem.

Fortunately, we know the correct solution - tax land values, relax planning restrictions, and let the market sort it all out.

Rent Control is the knee-jerk reaction the elites want the proles to talk about, as it's easy to see why it wont work, but it keeps them from demanding the real problem be addresses.

A nice new false dichotomy for the media to pretend to debate. I guess the whole austerity thing's got a bit boring now.

Edited by (Blizzard)

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  • 243 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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