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

R.
Inflation is actually the government transferring its debt to the citizens.

Reply to the comment left by Beaver at 27/03/2024 - 18:30
Well made observation

When inflation is under control, landlords keep rents low. It’s easier than raising rents by 1% or 2% every year. Some may increase rents by 5% or 6% after 3 or 4 years. Many don’t bother.
When inflation rises sharply, everything costs more. Everything except rents that have been fixed in for 1, 2 or even 3 years. Tradesmen, boilers, decorating materials, kitchens all cost more.
So, in their infinite wisdom the government hike up interest rates. Some landlords see their mortgage interest costs double, treble, quadruple (in my case, rise almost 7-fold).
This hike in interest rates means some landlords are desperate to increase rents for their properties to stay viable. However, they may have to wait 1, 2 or 3 years to increase their rents. When they finally can propose a rent increase, it may be to account for 2 or 3 years’ inflation. A 20% or 25% (or higher) increase is perfectly justifiable.
Section 24 wasn’t so important when interest rates were ridiculously low. As rates rise, the impact is much greater. Some landlords will be operating at a loss and will be desperate to sell. Unfortunately, getting vacant possession is expensive and stressful.
Now the government wants to make the landlords’ lives more difficult with the Renters (Reform) Bill. Timing, they say, is everything.

Reply to the comment left by Beaver at 27/03/2024 - 13:26
Negative Cash Flow
The massive imbalance between the Section 13 once a year increase and the MPC three weekly rate increase is a huge financial risk borne by the BTL landlord and imposed by the government in support of financial markets.
So negative Cash flow is easily achieved by not anticipating 14 consecutive rate increases to a variable rate mortgage which is the default after a fix period expires.
That's a double jeopardy with Section 24 tax on turnover.
Thus government destroys the market and competition.
If only there was a responsible agency for that, that acted..

Reply to the comment left by Jim K at 27/03/2024 - 18:32
"Inflation is actually the government transferring its debt to the citizens."
Further leveraging the capital gains tax supposed profit to take more of the property value in addition to the value added tax, corporation tax, dividend, income taxes that they already take.
A financial circular economy straight into the treasury!
They print the money and you have to give it back.

As the polar opposite of a monopoly, the aspirant renter cannot be exploited by the PRS. I like the adage that in London you compete with the richest in the world for housing, and the poorest for labour - herein lies the exploitation, enacted by the state.

Reply to the comment left by PAUL BARTLETT at 27/03/2024 - 22:01
I agree with this of course except that it's the Bank of England that raises interest rates. The government is complicit because it has introduced tax policies that stop small landlords (that's the majority of them) offsetting the cost of their finance against their rents.

So yes the fact that rent inflation is the bit of inflation that remains stubbornly high is a situation created by government. The UK national government is destroying the market, destroying competition and manufacturing a crisis. The SNP government in Scotland has made it worse by introducing rent controls.

The Bank of England raising interest rates is a blunt instrument and it pushes rents up. It would have less effect if you could deduct your finance costs like any other business or investment.