Generation Rent blames landlords for soaring rent prices outpacing wages

Reply to the comment left by Sophie Johnson at 19/09/2024 - 19:41
Perhaps ask why increasing numbers of PRS properties are dropping out of the market (about 300,000 over the past eight years or so) despite the levels of rental increase in recent years.

And if these comments are too trivial for you to balance against Ben Twomey’s ‘excellent’ perspective I’d suggest you go to original source material to look at such things as tax changes (especially since 2015 and ‘Section 24’), legislative changes, financial changes, particularly the cost of finance that feeds through as fixed rate loans have to be renewed, the inflation rate for materials and labour in property maintenance (my experience around 40% since Covid) and the interaction between these factors.

Reply to the comment left by Keith Wellburn at 19/09/2024 - 20:33
Keith, I suggest that time is better used by observing how much higher rents are in England's South East that in comparable locations in Germany and France. That comparison is very telling. Simply, on the English side, rents are unreasonably high. That has to be corrected, for the perfectly obvious reason. Land-lording in England has been allowed to become far too profitable. Starmer, who I do not like at all, is doing the right thing here.

I assume it’s the higher demand for people wanting to live / are living in the UK, vs stock available to accommodate.

Price is usually set by what someone is willing and able to pay for a good or service. If Landlords are setting rents extortionately high, 1 of 2 things happen: 1) it’s so high that no one is willing or able to pay it (so the landlord would have to reconsider their strategy), or 2) someone is willing and able to pay = rent agreed.

We will all see whether Starmers master plan comes to fruition - I’ll get the popcorn.

Reply to the comment left by Sophie Johnson at 19/09/2024 - 20:47
Sophie, clearly there is no reasoning with you. Despite being presented with rational, honest and factual information, you choose to ignore them all and refer to a different countries rental system. The simple facts are that increased costs, inept political decisions (over decades) when combined with increased legislation, lead to increases in rents. There, is that simple enough for you? So please, stop your landlord bashing and take it to the politicians who have created this mess we all (landlords and tenants) find ourselves in.

Reply to the comment left by Sophie Johnson at 19/09/2024 - 20:47
I wrote to my MP in 2015, along the lines of ‘for crying out loud build more houses especially social rent and stop driving smaller landlords out of the market (Osborne’s stated ambition) as this will end up with fewer properties to rent obviously leading to rent increases’. Let’s see if Labour gets them built.

I’m sure the SE is worse than other areas for rental affordability - but look at the value of the properties - London rents, even before expenses are deducted are lower than the interest for simply depositing cash in a bank account. Many SE based landlords buy cheaper property in the north because whilst rents are much lower the actual yields are higher on the capital invested.

Also worth noting that large corporates are moving into residential through build to rent - these tend to be expensive flats with lots of bells and whistles aimed at young professionals willing to pay the price but more, such as Lloyds bank are moving to family homes - how much this shift is feeding into the figures I’m not sure but they certainly won’t be looking to undercut smaller landlords.

Reply to the comment left by Sophie Johnson at 19/09/2024 - 19:34
Sophie, you are being very naive. Do you want to live in a communist, or similar, state where everything is controlled by the government or big business? We are already heading that way.

Rents are a product of market forces. If there is more supply than demand then rents will come down. Until then they will go up.

If governments force landlords out of the rental market, due to rent caps, unfair taxation, too much regulation, etc then rents will go up, not down.

Reply to the comment left by Sophie Johnson at 19/09/2024 - 19:34
I, like most landlords are leveraged on my properties.
I have my properties on 5 year fixed rate mortgages in overlapping chunks to try and mitigate jumps in interest rates. Over the last 3 years about 60% of my portfolio has come off fixed rates and onto SVR. The danger is of course fixing at the crest of the wave. So I have most of my portfolio making a loss at the moment while I hang on and hope for rates to reduce.
Now, as you like percentages so much Sophie the worst mortgages I have are 4 properties with CHL. The mortgages went up by 67%. I have about 25% equity in the properties. CHL were not offering any new products and because of the stress tests introduced by the banks when rates were ridiculously low, it is impossible to move to another lender.
If you want to make comments on this forum amongst experts in the field you really need to educate yourself.
Rents in the PRS have literally nothing to do with inflation or wage growth.
They are however directly related to the landlords operating costs and the "supply and demand" within an area.
We are a business, not a public service!
A shop cannot trade at a loss and if the demand is high for a limited product then the price will increase.
These are market forces.
As per my earlier comment I have sold 3 houses and put the money into the business to keep it afloat. To give that some real world perspective for you this was just over £320,000. This is my money that I have worked for and was meant to be my pension. This took nearly 20 years to accumulate. I didn't hesitate for a second in the decision to lose my money to keep my business afloat and keep my tenants in their houses.
Uninformed and uneducated people like yourself have made landlords like myself pariahs in this.
Like most in this industry I am asset rich but cash poor. Now more and more of us are fed up with this situation so we are bringing forward our exit plans. At the other end it is no longer viable to start a landlord journey and slowly but surely becoming socially unacceptable to be a landlord.
So what you think is an informed, and presumably intelligent comment to a one sided article, which effectively persecutes an minority (more tenants than landlords after all), is actually part of the real problem, you and those like you are literally driving people from the business and you have no plan to replace us.
You, by making such comments, have directly contributed to the housing crisis in this country. Your few lines of text will have been the straw that broke the camels back for someone. It really is the butterfly effect, you have typed something and further down the line a family is homeless.
Maybe you should sit down and think a bit harder about what you are trying to achieve.

Reply to the comment left by Northern Observer at 19/09/2024 - 21:53
To Northern Observer:
'Despite being presented with rational, honest and factual information, you choose to ignore them all and refer to a different countries rental system.'

I propose another perspective that I think should be instructive: Rents are too high in most of the UK. A thinking that chooses to ignore this is very misguided, and indeed, far from rational. British landlords make the illogical error of thinking of their rented properties as their own. But it is not their own ii someone is paying them to make it his/her home. Therein lies renters' rights.

British landlords have to be re-educated to understand that they cannot have their cake and eat it too.

Reply to the comment left by Sophie Johnson at 20/09/2024 - 11:15
I have changed my opinion from 'very naive' to 'completely clueless'.

As soon as landlords are told that their home is not their own what do you think they will do? My guess is that they will sell.

Who do you think will buy? It is likely to be a buyer for own use, not a landlord (who is going to buy as a landlord if the property is no longer considered to be theirs???).

What do you think will happen to rents in this scenario? There will be fewer rental properties available to tenants, so my guess is that rents will go up, not down.

Reply to the comment left by Sophie Johnson at 20/09/2024 - 11:15
You compare UK to Germany. I’d like to point out an example of the difference that can exist in doing that.

In Germany it is common to rent with an empty space for a kitchen - tenants fit their own.

In the Uk there is a decent homes standard which is going to be applied to the PRS - no legitimate landlord is against a safe well maintained home - however part of the criteria for a landlord supplied kitchen is that it must be under 20 years old to be considered ‘decent’ .

Perhaps you can see the difference in landlord cost and how this may be a factor in rent levels?