Tuesday, June 4, 2019

Any day now the promised rent increases will come

ONS Rental index April 2019

For all the bleating from the landlord lobby, rents show no evidence of increased costs being passed on. I'm sure it'll come! Hopefully the gvmt will learn the lesson and increase taxes on owner occupied property as well and use the proceeds to reduce the damage done by taxing people in poverty.

Posted by mombers @ 08:19 AM (1341 views)
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3 thoughts on “Any day now the promised rent increases will come

  • You can’t pass costs on to people who are already skint!

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  • @1 exactly. All the threats of rent rises come from people who can’t explain why they are not already charging their tenants more. The folk who produce these anecdotes can’t explain how the carefully collected ONS figures don’t capture their personal experience. Their wonderfully colourful anecdotes of raising their rents from below market to market in response are amusing. How exactly has charging people below market rent helped them in the long run? Say the landlord sells. The tenants then have to find somewhere to live locally at a significantly higher cost, or move elsewhere. If you’ve made decisions on schools, job, etc. based on non-market prices, you’re going to be in trouble. The fact that a landlord with a small or no mortgage can run at a profit at much lower than market rents is an indication of how high the profit margin is. Mortgage interest is an optional expense, not a cost of production. The real cost of production in this case is the depreciation and cost of capital of the building only.

    Imagine if Thames Water took out massive loans well in excess of its capital expenditure, then said to the regulator that they should be allowed to charge users a much higher fee as a result. Water bills in London are actually the lowest in the country (https://inews.co.uk/news/uk/uk-pay-most-least-water-bills-expensive-cornwall-sussex-devon-hampshire-london/). The economies of scale explain this (more people using the same pipes). But the cost of building, maintaining and insuring a home is pretty uniform across the country. Taking a massive loan against the land, which has no cost of production, cannot be treated as a legitimate tax deduction.

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  • tenyearstogetmymoneyback says:

    And if people aren’t skint they might re-compare the cost of renting with the cost of buying and decide on the latter. Been there and done that in 2011. Admittedly what I could afford to buy wasn’t as big, but at I don’t have to worry about rent increases (or even mortgage increases) now.

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