Why can’t the media understand how inflation affects rent rises?

Every inch of society is tainted with the politics of envy , msm, politics charities the whole lot.

Reply to the comment left by JB at 27/03/2024 - 12:19
It's a lot like getting rid of cash.

Anybody that runs a small business or has been a director of a business knows that businesses mostly go bust not because they don't have sales or aren't making a profit but because of negative cash flow.

We have recently seen a surge in the price of second hand cars.

https://www.car.co.uk/media/blogs/general/the-rising-cost-of-second-hand-cars-explained

This has happened because of supply issues, rising costs, and inflation. In the case of private rental housing stock UK governments have driven up costs by stopping the majority of small landlords from deducting their finance costs. They've also introduced new EICR legislation. Until recently they had also introduced a requirement to upgrade all (private) rental properties to EPC band C or above and although they've now back-tracked on that some landlords have already reacted by increasing their costs or exiting. All of these things hurt tenants in the medium to long term.

So we have government-imposed additional costs, inflation and supply issues (exacerbated by government, especially the SNP). The SNP government in Scotland has presided over a period when the government encouraged the growth of housing provision from housing associations. But what the SNP government either failed to realise or just didn't care about was that the PRS provides competition in the housing market *especially* small landlords. So by driving out competition they made the supply issue even worse.

Now the effect of that is governments are already short of cash and because they drove competition out of the market they have increased the price of rents and increased the total size of the benefits bill. The SNP government has been busy bankrupting itself (like the SNP party itself) and the UK governments all need to learn from that object lesson in bad governance.

Punish small landlords and you punish tenants. Careful what you vote for.

Reply to the comment left by Beaver at 27/03/2024 - 10:32
Talking to a friend yesterday who spent 17 years in Berlin. Renting is the norm, and is not seen as a 'necessary evil' for those who can't afford to buy. The quality of construction is superior, the rents are lower, and everyone buys into the level of regulation, where renters don't view themselves as victims, and landlords aren't viewed as greedy and exploitative.

Putting aside the greedy landlord narrative, I believe renting is becoming a lifestyle choice, especially for younger professionals and young families who want/need the flexibility to move around. Working for an employer is no longer a long term commitment, and neither is where they live. However, as we see with student accommodation, where their expectations are far greater than in our days, the same applies to rental stock.

This will not be met by traditional BTL, and certainly not social housing, but will be met by BTR, which is where the corporates such as Blackrock come in. They will invest in more upscale property, which commands higher rents, and attracts, shall we say, a better type of renter.

BTR is an asset class like any other investment in property. I think it is the future, but traditional BTL landlords need to decide if their money is best left to the whim of governments, or something like BTR.

I'm having a long term dabble.

Reply to the comment left by NewYorkie at 27/03/2024 - 16:40
What are you dabbling in?

Reply to the comment left by NewYorkie at 27/03/2024 - 16:40
I think this is correct; I think that companies like Blackrock may well invest in the more upmarket BTR sector. But there will also be corporate investors buying large portfolios of cheaper accommodation to rent to renters at the lower end of the scale because the yield (return on capital employed or return on total assets) will be higher. This is a situation that the UK government is *creating* by attacking the large number of small landlords.

The net effect of attacking small landlords is that tenants will pay higher rents and the benefits bill will go up.

Reply to the comment left by JB at 27/03/2024 - 17:19
A Build to Rent property investment trust.

Reply to the comment left by NewYorkie at 27/03/2024 - 17:30
Now if I remember correctly shares in a build-to-rent property investment trust can be held in a SIPP. That's correct isn't it?

Reply to the comment left by NewYorkie at 27/03/2024 - 16:40
The German system is much more like a commercial rent, the tenants even fit their own kitchen. The only obligation is to maintain the fabric and the utilities far more hands off than the UK system - the issue is that they want full nanny service at hands off prices.

Reply to the comment left by Beaver at 27/03/2024 - 17:32
ISA and SIPP. I couldn't put it in my ISA because I'd already contributed the max for this year, but will do so for 2024/5.

Reply to the comment left by NewYorkie at 27/03/2024 - 17:51
Interesting idea that isn't it? You can invest your pension in a property investment trust via a SIPP so that somebody else can manage your investment, take a margin out of you, and maximise the rents harvested from the residential property. The financial services companies managing that property can deduct all their finance costs.

But you can't invest your own pension in a buy-to-let property. And if you are a small landlord investing in residential property directly you are being attacked and prevented from deducting your finance costs. No tenant benefits from any of that.

I wonder how far the UK governments would get attacking the likes of Blackrock.