Economist Explains Why Your Rent Is Still So High
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- เผยแพร่เมื่อ 11 ก.ย. 2024
- Despite inflation coming down to target levels of around 2%, rent inflation remains at 8.7% across England and 9.7% within London.
The i paper's Housing Correspondent Vicky Spratt is joined by Senior Economist at the Joseph Rowntree Foundation Rachelle Earwaker to discuss why your rent isn't coming down anytime soon.
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What do you think needs to be done to solve this crisis?
The economist is misleading where she implies that the new government are taking a serious stance on social housing. She's correct in saying that Stamer's Labour is removing legislation that has hindered both public and private construction projects, but to imply they are also building more social is not correct.
The government's plan is that the private sector will step in to fill the demand for new housing now that it should be easier to build with the easing of legislation. But it's not convincing to expect the private sector here will be willing to build (genuinely) affordable housing, build housing of acceptable quality, or that local authorities will be able to afford to buy this housing stock from the private sector to add it to social housing stock.
Scrap section 24 now!
@@theipaper simple! Increase supply. Incentify BTL. As an economist surely you understand that though you may hate it. I do not have envy or jealousy,so creating the conditions for fairness is easier.
Interesting interview; Elephant in the Room, the concept of an open-ended market on a natural monopoly, namely, land. Every time there is an above-inflation increase in incomes and/or government subsidies for low-income families in private rented housing, the rents will go up by that amount; if interest rates go up higher, that will be the datum percentage, CPI for the landlord is irrelevant (unless that's the highest measure, which historically it rarely is).
The most obvious and greatest was the landlord's reaction in 1914 to increase wages for the armament workers. That became the datum, and nationwide, there were great increases in rent even if you didn't work in the sector that was your bad luck, i.e. tough! Then, as we know, the great women of Glasgow organised a rent strike in 1915, which gradually spread through the country.
Government; What to Do?
Do they violate the rules of protecting the landed? The whole basis of democracy was based on protecting land rights to the point of war. But if they did, they would be lining the already hated rentier landlord with more unearned income (and that would be seen as those sitting in parliament lining their own and their 'mates' pockets). With Revolution in the air already, it was a tinderbox. All of that, with the husbands and sons of these folk on the front dying for lack of arms as the landlords get more prosperous due to war rather than putting their lives on the line.
The only option to stop this second great theft (the first being the 300 years of Enclosure Acts) was a Rent Freeze (backdated to 1914 for obvious reasons). The rent freeze lasted until 1918 but was changed to a form of Rent Control, then frozen again from 1939-45, and again various forms of rent control until 1988.
I'm not the greatest fan of Churchill, but even he, in his famous 1909 Monopoly speech in Edinburgh speech (constantly quoted, but for good reason) had this to say in conclusion (and rarely quoted);
I hope you will understand that, when I speak of the land monopolist, I am dealing more with the process than with the individual land owner who, in most cases, is a worthy person utterly unconscious of the character of the methods by which he is enriched. I have no wish to hold any class up to public disapprobation. I do not think that the man who makes money by unearned increment in land is morally worse than anyone else who gathers his profit where he finds it in this hard world under the law and according to common usage. It is not the individual I attack; it is the system. It is not the man who is bad; it is the law which is bad. It is not the man who is blameworthy for doing what the law allows and what other men do; it is the State which would be blameworthy if it were not to endeavour to reform the law and correct the practice.
We do not want to punish the landlord.
We want to alter the law.
End of quote.
Please take a look below for the consequences of rent control. If required, I can reference everything written; I've been at this for some time concerning finding good and bad consequences, sometimes criticised as to why I seem so keen on RC rather than other options, the most fundamental reason it works, yes brutal and highly disruptive but none the less it forces government to build social housing as private landlords fled as yields drop, land values fall (but you have to regulate finance so financialised debts markets for land are basically illegal, re-enter mutal regulated building Societies). It is complex, but we've been here before and have a history. Good Acts 1919, 1947( though uplift should've been say 60% instead of 100%) Bad 1954 and 57 caused slum landlord Peter Rackman.
1) For Rent Control (always starting with a backdated freeze) to work for tenants and expel landlords, it will take at least ten years as houses are an illiquid asset (unlike cash is the most liquid) to either (historical evidence for this) sold to sitting tenants and/or local authorities to be turned back into social housing (1920s after four years rent freeze and 2 + years of Rent controls, 1 million properties sold to sitting tenants). As landlords sell up, the value of the land that property sits upon falls, and a domino effect ensues due to falling yields for landlords (i.e. future gains from land price increases).
2) This needs to be a national RC, as you'll only move the problem elsewhere (in the US, via N.Y. issues).
3) In 1910, 90% of the property was rented, and there was no social housing (it didn't exist in real terms). Owner occupiers were only for the remaining 10% who owned multiple properties, a form of feudalism.
4) After the initial Rent Freeze and Rent Controls post-1914, the government of the day was forced into provision. This started with the 1919 Housing Act for council homes, followed by a promise for slum clearances from the previous rentier landlords, who would ALWAYS do the minimum maintenance due to 'loss aversion'. Mass private building for owner occupiers for skilled working and middle classes as land fell as a proportion of total value to 3-15% (the other part being build cost inc materials and profit). Aided by the 1942 Beveridge Report linking housing with health (as we have seen recently, damp = mould = respiratory issues, even early death).
5) So even an average income of one earner could buy a 2.5-bed semi on a 25-year mortgage with a 10% deposit; this included postmen and women. Then, the 1947 Housing Act restricted what was known as the uplift of land values when former poor agricultural land was built upon by 100% taxation (too much and frightened the horses), but this meant a win for new towns with the government paying little fo the land, as there was no future uplift (i.e. yield)
6) In 1954 and 1956, major parts of the 1947 Act were repealed, allowing for fewer forms of rent control, leading to slum landlord Peter Rackman. Still, housing was being built hand over fist, often of poor quality, by secretive 'free market' large private building companies.
7) By the 1970s, the Private Rental Sector (PRS) had dropped from 90% in 1910 to 7% in the mid-70s. There were surpluses in certain areas, but more slums needed to be cleared. Nobody cried out for more PRS; they wanted more owner-occupier and better-quality social housing.
8) In 1970-73, credit deregulation (CCC Act) caused a bubble, but it was abandoned once the oil crisis started in 73, followed by Wilson's re-election.
9) Housing was still affordable, but food, electricity, and petrol were expensive. However, children could independently afford a starter home in their early 20s.
10) In 1979, the big change, the end of affordable housing
We all know what happened next, but one point is worth highlighting. Rent Control was ended in 1988, and the market immediately inflated (aided by the financial deregulation of the Big Bang in 1986), but few small landlords reentered. But in 1992, the ERM crisis flattened the housing market, and a buy-to-let mortgage was created as a legal Rentier mortgage to revive it. Then, those who benefited from cheap housing got greedy, but in their defence, the welfare state was slowly being chipped away. This led to what is now known as 'asset welfarism'; the issue is if you don't have an asset, you're screwed.
So what has changed? Land values. Remember I said in the 1950s that they were 3-15% of the property's value? Well, now, because the land is a tradable commodity with a house built on top, and what is known as a financialised debt funds this (again due to future yields, i.e. price increases), it is now on average 70%! (Build being 30%).
What type of rent control? Well, there is already an existing rent control. My flat is a do-it-yourself shared ownership property from the early 1990s. The half I pay rent on is controlled by never being allowed to go above RPI inflation (now CPI) and is ultimately governed by the central government. Its original value was based on 3% of the original purchase price. The beauty of this is that there is no need for rent inspectors.
So now my rent has fallen far behind market rates. I pay a 50% share in rent at 40% of market value. The other half I own outright, meaning I've achieved J M Keynes's version of a 'good life'. That's great for me, but what about the under-40s and those over that age who, for whatever reason, missed the cheap housing period?
Fun Fact: Currently, the PRS is roughly 21% of all properties. If we went back to 7%, that would release 4 million properties onto the market nationwide.
New builds are needed; the last 1 million can be built over 4 years, with the required x per year as the economy fluctuates.
A few people have a surplus property to rent, creating scarcity while doing sweet FA, the much-hated Rentier Class. This is not as clever as our passive income friends would have you believe; it exploits people who make and do stuff, i.e., 'key workers'.
All political will is no more or less; the primary reference is Thomas Piketty. In my bookcase, I can see at least 30 books by far more influential people than I that support the above).
This is a basic overview, leaving loads out; at a minimum, it's a book for comparative analysis.
@@allykhan8594
The number of private rental properties increased from 10% of all houses in 2001 to around 19-20% in 2016, where is has remained at 19%.
How much bigger do you think the PRS needs to grow to help with the rental crisis? 25%, 30% or 50% of all housing?
And if (in theory) it were to reach 100%, do you believe it would lower average rents?
And if not, why not?
What is happening in the UK property rental market is only typical of the wider UK property market.
Demand is by far outstripping supply. This is causing a national shortage. There is, however, one big factor that makes the nationwide property shortage even worse. I call it property hot spots and these are largely due to regional inequalities and the consequences of not levelling up.
Though there is an overall shortage of housing in the UK, this problem is many times more acute in places like London, Bristol and recently I noticed, Glastonbury. This is because these places are where the vast majority of people want to be located near/into in order to get a professional, good quality, high wage job.
This often means that in these locations you can have 30 people going to a viewing to rent a tiny flat at £2k rent per month. Then you have people living at the kerbside in a caravan because even on a wage that is higher than average for the UK, people in these areas still can't find an affordable place to live.
In complete contrast to this you have other locations such as the northern town I live in which is in the top third of most deprived towns in England. There are no professional, high paying jobs here. All the jobs are manual, minimum wage, production line type of jobs.
This means that nobody from the outside sees my hometown as a good place to come to and make a good life for themselves and their family.
As a consequence of this it's easy to find a terraced house for sale for £70k or a three bedroom semi-detached house for £100k. Average private rent across all property types in the town is £600pcm. This is because the area's property demand is very low. There's actually houses sat empty and boarded up that they can't give away.
I personally believe that this is probably the reason why the plans for a new housing estate to be built on the edge of my hometown have been kicked into the long grass. After all, there is no point in building more houses in a poor northern town where nobody wants to come to live because of the local high unemployment, low wages, lack of quality jobs and where some of the existing houses are sat empty.
In truth the opposite is happening. A lot of the children that are born in the town are now going onto university and then after graduation are leaving my hometown to migrate to those more affluent areas with the jobs and high wages that everyone wants which puts even more pressure on those areas whilst at the same time it means the population of my hometown is actually decreasing and the average age is increasing as we gradually loose all our young people.
My belief is that if the professional, high paying jobs were spread out more evenly across the entire country then the people would naturally spread out more. Though this wouldn't completely solve the UK's housing shortage but it would go a long way to helping towards relieving the pressure on those areas currently experiencing the worst shortages.
It's about using our existing housing stock much better as well as building more new homes.
what's your town if I may ask.
Such towns can be found in South Yorkshire for example. Barnsley and suchlike. Also North East. Lancashire. Burnley for example. Not a million miles from Lake District Manchester.
@@voodo0983did you read OP's whole post? It has 11 paragraphs. They said that people are moving from places that have few good jobs (like the north of England) to places with better job prospects (like London). So there is spare housing sitting empty in the north and homeless people who can afford anywhere to live in the south.
It's because landlords are greedy and can put the rent to whatever level they want. If I could set my salary at any level I wanted and my employers didn't have any choice about paying the level I wanted, I'd earn more money. It's not rocket science.
Rents have increased however landlords are making less net profit than they were 10 years ago. As mentioned in the video this is due to increased regulation causing increased costs and also high interest rates. However not mentioned in the video is the huge tax increase due to Section 24 and a stamp duty surcharge, both by George Osborne. These were in actuality not a tax on landlords, they are a tax on tenants by a Chancellor who despised the working classes (he also froze Local Housing Allowance and championed 'Austerity') edit: oh and record immigration
This economist is very one sided. Doesn't mention the inpact of Section 24 where Landlords pay tax on turnover and not profit. Massive increases in Mortgage interest. Not to mention greedy council classifiing HMOs as 3 people or more on a single contract in a home as opposed to what used to be 5 people that do not know each other on separate contracts. Classic unintended consequences! Councils charge up to £1500 per licence. Who pays for all this... the renter! The government needs to stop meddling and just build more housing along with streamlining the planning as different councils have different requirements!
It's the I papet
@@vinniechanI never said it was. What is your point?
Renters reform bill will cut supply and increase rents even more when demand is increasing. Are we sure this is the economist and not a campaigner pretending to be a economist?
Why is the comments full of people defending landlords
Thanks to the rise of landlordism in the last 20 years, one in twenty of adults in England are now landlords.
The comments are them venting their views (and basically moaning about pesky government giving tenants more rights, and taking more in taxes and basically making things less easy and profitable for them and things are so bad they are definitely or maybe going to sell up).
The narrative usually follows that there has been mass exodus landlords since Section 24 reducing the number of private rentals.
When challenged for the data they change the subject.
The reality is there are now 50,000 more private rentals in England than in 2019.
I agree if the government invests in social housing this can help fix the issues, but those in social housing need to understand when they have a 4 bedroom house because they have kids, when the kids leave they need to move to a smaller house to let new families have the required number of bedrooms. Social housing is for all that need it, it should not be given for life.
That's what the "bedroom tax" was for. In the private sector people only get housing benefit that matches the size of place they need, not the size of place they actually live in. The bedroom tax brought the same rules to council housing.
@@adrianthoroughgood1191 I understand what the bedroom tax is and it’s a small tax that allows people keep living in a large property. My issue with the bedroom tax is it allows the wealthy people in this situation to continue to have a very low rent for a larger house than they need and it does not help the poorer downsize. The fact is or at least was once you get social housing you have it for life, you can even arrange to swap you house if you want to move. My point was that social housing should be re-evaluated at certain points. It is not OK to become able to get your own property as you have more money but refuse to as your friends are your neighbours. If you don’t need social housing anymore you should not have it. Social housing should not be for life.
Interesting interview; Elephant in the Room, the concept of an open-ended market on a natural monopoly, namely, land. Every time there is an above-inflation increase in incomes and/or government subsidies for low-income families in private rented housing, the rents will go up by that amount; if interest rates go up higher, that will be the datum percentage, CPI for the landlord is irrelevant (unless that's the highest measure, which historically it rarely is).
The most obvious and greatest of these was the landlord's reaction in 1914 to increase wages for the armament workers. That became the datum, and nationwide, there were great increases in rent even if you didn't work in the sector that was your bad luck, i.e. tough! Then, as we know, the great women of Glasgow organised a rent strike in 1915, which gradually spread through the country.
Government; What to Do?
Do they violate the rules of protecting the landed? The whole basis of democracy was based on the protection of land rights to the point of war. But if they did, they would be lining the already hated rentier landlord with more unearned income (and that would be seen as those sitting in parliament lining their own and their 'mates' pockets). With Revolution in the air already, it was a tinderbox. All of that, with the husbands and sons of these folk on the front dying for lack of arms as the landlords get more prosperous due to war rather than putting their lives on the line.
The only option to stop this second great theft (the first being the 300 years of Enclosure Acts) was a Rent Freeze (backdated to 1914 for obvious reasons). The rent freeze lasted until 1918 but was changed to a form of Rent Control, then frozen again from 1939-45, and again various forms of rent control until 1988.
I'm not the greatest fan of Churchill, but even he in his famous 1909 Monopoly speech in Edinburgh speech (constantly quoted, but for good reason) had this to say in conclusion (and rarely quoted);
I hope you will understand that, when I speak of the land monopolist, I am dealing more with the process than with the individual land owner who, in most cases, is a worthy person utterly unconscious of the character of the methods by which he is enriched. I have no wish to hold any class up to public disapprobation. I do not think that the man who makes money by unearned increment in land is morally worse than anyone else who gathers his profit where he finds it in this hard world under the law and according to common usage. It is not the individual I attack; it is the system. It is not the man who is bad; it is the law which is bad. It is not the man who is blameworthy for doing what the law allows and what other men do; it is the State which would be blameworthy if it were not to endeavour to reform the law and correct the practice.
We do not want to punish the landlord.
We want to alter the law.
End of quote.
Please take a look below for the consequences of rent control. If required, I can reference everything written; I've been at this for some time concerning finding good and bad consequences, sometimes criticised as to why I seem so keen on RC rather than other options, the most fundamental reason it works, yes brutal and highly disruptive but none the less it forces government to build social housing as private landlords fled as yields drop, land values fall (but you have to regulate finance so financialised debts markets for land are basically illegal, re-enter mutal regulated building Societies). It is complex, but we've been here before and have a history. Good Acts 1919, 1947( though uplift should've been say 60% instead of 100%) Bad 1954 and 57 caused slum landlord Peter Rackman.
1) For Rent Control (always starting with a backdated freeze) to work for tenants and expel landlords, it will take at least ten years as houses are an illiquid asset (unlike cash is the most liquid) to either (historical evidence for this) sold to sitting tenants and/or local authorities to be turned back into social housing (1920s after four years rent freeze and 2 + years of Rent controls, 1 million properties sold to sitting tenants). As landlords sell up, the value of the land that property sits upon falls, and a domino effect ensues due to falling yields for landlords (i.e. future gains from land price increases).
2) This needs to be a national RC, as you'll only move the problem elsewhere (in the US, via N.Y. issues).
3) In 1910, 90% of the property was rented, and there was no social housing (it didn't exist in real terms). Owner occupiers were only for the remaining 10% who owned multiple properties, a form of feudalism.
4) After the initial Rent Freeze and then Rent Controls post-1914, the government of the day was forced into provision. This started with the 1919 Housing Act for council homes, followed by a promise for slum clearances from the previous rentier landlords, who would ALWAYS do the minimum maintenance due to 'loss aversion'. Mass private building for owner occupiers for skilled working and middle classes as land fell as a proportion of total value to 3-15% (the other part being build cost inc materials and profit). Aided by the 1942 Beveridge Report linking housing with health (as we have seen recently, damp = mould = respiratory issues, even early death).
5) So even an average income of one earner could buy a 2.5-bed semi on a 25-year mortgage with a 10% deposit; this included postmen and women. Then, the 1947 Housing Act restricted what was known as the uplift of land values when former poor agricultural land was built upon by 100% taxation (too much and frightened the horses), but this meant a win for new towns with the government paying little fo the land, as there was no future uplift (i.e. yield)
6) In 1954 and 1956, major parts of the 1947 Act were repealed, allowing for fewer forms of rent control, leading to slum landlord Peter Rackman. Still, housing was being built hand over fist, often of poor quality, by secretive 'free market' large private building companies.
7) By the 1970s, the Private Rental Sector (PRS) had dropped from 90% in 1910 to 7% in the mid-70s. There were surpluses in certain areas, but more slums needed to be cleared. Nobody was crying out for more PRS, just more owner-occupier, and better-quality social housing.
8) In 1970-73, credit deregulation (CCC Act) caused a bubble, but it was abandoned once the oil crisis started in 73, followed by Wilson's re-election.
9) Housing was still affordable, but food, electricity, and petrol were expensive. However, children could independently afford a starter home in their early 20s.
10) In 1979, the big change, the end of affordable housing
We all know what happened next, but one point is worth highlighting. Rent Control was ended in 1988, and the market immediately inflated (aided by the financial deregulation of the Big Bang in 1986), but few small landlords reentered. But in 1992, the ERM crisis flattened the housing market, and a buy-to-let mortgage was created as a legal Rentier mortgage to revive it. Then, those who benefited from cheap housing got greedy, but in their defence, the welfare state was slowly being chipped away. This led to what is now known as 'asset welfarism'; the issue is if you don't have an asset, you're screwed.
So what has changed? Land values. Remember I said in the 1950s that they were 3-15% of the property's value? Well, now, because the land is a tradable commodity with a house built on top, and what is known as a financialised debt funds this (again due to future yields, i.e. price increases), it is now on average 70%! (Build being 30%).
What type of rent control? Well, there is already an existing rent control; my flat is a do-it-yourself shared ownership property from the early 1990s; the half I pay rent on is controlled by never being allowed to go above RPI inflation (now CPI) and is ultimately governed by the central government. Its original value was based on 3% of the original purchase price. The beauty of this is that there is no need for rent inspectors.
So now my rent has fallen far behind market rates. I pay a 50% share in rent at 40% of market value. The other half I own outright, meaning I've achieved J M Keynes's version of a 'good life'. That's great for me, but what about the under-40s and those over that age who, for whatever reason, missed the cheap housing period?
Fun Fact: Currently, the PRS is roughly 21% of all properties. If we went back to 7%, that would release 4 million properties onto the market nationwide.
New builds are needed; the last 1 million can be built over 4 years, with the required x per year as the economy fluctuates.
A few people have a surplus property to rent, creating scarcity while doing sweet FA, the much-hated Rentier Class. This is not as clever as our passive income friends would have you believe; it exploits people who make and do stuff, i.e., 'key workers'.
All political will is no more or less; the primary reference is Thomas Piketty. In my bookcase, I can see at least 30 books by far more influential people than I that support the above).
This is a fundamental overview, leaving loads out; at a minimum, it's a book for comparative analysis.
A quick 1000 words, for more information Housingresearch *(dot) solutions
*(dot = .)
I hate rent control, but your position was backed up with good analysis and history. I can honestly say you're not pulling policies out of your backside.
Unfortunately, the reason why it won't work this time around is that things are different now. From the history you wrote above, it took decades before you saw any meaningful change.
Now, there's no political will to do anything that will take 2 election cycles, let alone decades.
Now, no government has even done any reasonable analysis like you've done to come up with policies that will work. The landlords that everyone hates are taxed by the government heavily. Collecting taxes on revenue rather than profit and no one is asking the government what they are spending this money on. If you're collecting taxes from landlords, build more houses that would make sense. The extra taxes from landlords are now part of the income that the government relies on.
The really solution is to build more houses. Great, Labour promised 1.5 million homes. But who will build them? The country lacks the right skills to build. Almost everyone is either delivering kebab, stacking shelves at Asda, or delivering packages for amazon.
You'll begin to see that it's easier said than done. In the age of 1-2mins, videos no one can endure 10-20 years hardship to really fix things, if there is political will.
All I can say is that things will get worse, much worse. You'll see how councils and govts are seeking assets like a junky. Once they are sold its gone. Like you said above, if you don't have assets, you're fckd. Find a way to join the madness. Close your eyes and vision uk in 20 years. Do you think things will be better then?
@@grantbeerling4396 thank you for your knowledge ,and sharing ,amazing stats and history, as for a lighthearted answer ,back to tower blocks springing up again after we've knocked half of them down then ?how history repeats itself eh!?
@@bengaajayi5485 Thank you for your thoughtful reply and acceptance that there is no easy answer to a complex problem.
I am writing a 10K dissertation on this at present, and rather than giving a knee-jerk answer, I would rather give a full and empirical answer, which will come after I have completed my essay. So bear with me as you make good points that I am confident I can answer.
The point I will leave you with is that, yes, de-commodifying the market will take at least two decades; otherwise, a crash will do nobody any good. This also forced the government to build social housing. Many landlords sold their properties to their sitting tenants as land values fell; such was the exodus.
Note: We currently have the same number of houses per capita as in the 1970s; the only difference is that many are owned by a few. The difference is that 4 million+ are owned by the PRS and extracted from the market to either be purchased or become social housing. 7% of PRS is healthy, and 21% is not, socially and politically, especially with no rent caps.
If you are lucky enough to have surplus money to invest, why not invest it in new businesses, etc? But as Churchill said, I'm not blaming the landlord; what they are doing is entirely legal; what I am blaming is 'the system' that makes this legal (this was about Land Value Tax rather than Rent Control, but his point was the exploitation of the often trapped renter).
As for your last point, do we wait for a revolution in the air as the middle classes are shunned from property ownership, leading to collective rent strikes, riots, etc.?
In that famous sketch about class, Ronnie Corbet said, 'I know my place' as a working-class man, whereas Ronnie Barker had money and education as a middle-class person. I've seen militant, educated middle people fighting tooth and nail for the most minor of things due to their sense of entitlement.
I attended a series of lectures at Cambridge given by some well-read professors; at one point, I suggested we needed a Beveridge report 2.0, to which one of the other switched-on older students replied as did you, it has to get much worse. Which is a shame as that means more unnecessary suffering when we could do something now.
I will post an essay on my WordPress blog at some point to answer your points, and I look forward to continued debate, as there will be gaps that you will no doubt spot.
housingresearch (dot) solutions
@@nancyhood8395@ nancyhood8395 Ha ha, the present densities are too high, as a Landscape Architect and former building contractor. Some German research points to a maximum of 5 levels (so ground detachment for residents does not happen) with a density of 100 units per hectare (present up to 300)!
But yes, some lessons were learned, but a lot was forgotten to maximize the profit of hedge fund-backed building corps.
@grantbeerling4396 I've checked your site and will keep an eye out for your essay.
One thing which I'll like to add is. I don't like social houses. They are subsidised houses with our taxes. Unless subsidised houses are sustainable financially they are problem for everyone. We all know that councils can't properly maintain them which is why they are selling them off but giving landlord grieve over their failings. PRS can work when there's competition, which in turn improve quality.
I look forward to debate this more with you after reading your essay.
I get the feeling these Economists are renting. Rents will continue going up, gov policy insures that. More landlords are will still exit regardless of interest rates.
Wtf!!!call yourselves econimists!no mention of section 24 that landlords pay tax on TURNOVER NOT PROFIT,no mention of interest rates over doubling, sdlt,no mention of councils selling off their housing stock and not building more till later in blog,,and if a house price goes up so does the mortgage to service the bigger debt ,no mention that mortgage companies insist on a stress test to remortgage, and if dont meet stress test quadruple interest rates to go onto a svr !!!you call yourselfs economists,without taking most of the problem into account !!!you people are WHY were in a mess,overpaid and incompetent
Where did they find her she’s useless
For the benefit of tenants, let me explain in more detail. I am paying Standard Variable rate SVR of 9.75%. To remortgage requires a larger deposit to achieve a better loan to house value ratio. I am having to sell a house to transfer money to other houses. This locks me into 2, 3, or 5 years and I am to old for that. Nancy above points out section 24 which not only taxes me on turnover but pushes me into higher rate tax even on losses.
100% mate. Spot on
Are there any demand side solutions?
Certainly BarryJohn. I have sold 3 of my properties to tenants already. I have now made an appointment with a tenant to discuss lending him the deposit following your comment.
1. George Osborne's tax changes.
2. HMO licencing.
3. Ridiculous increase in legislation and the threat of rent repayment orders which can be ruinous.
4. Poor capital appreciation in London now.
5. Additional stamp duty.
6. Threat of EPC changes, consequences of having to increase insulation and the void while work has to be done.
7. Section 21.: threat of tenants not paying for months and unable to be evicted for months on end.
8. Massive interest rate rises; 50% of PRS accommodation is loosing money; makes zero commercial sense...
...and now...
9. Insane threat of new renter's rights such as A. not being able to sell for 2 years B. Having to offer tenants the property at below market value. C. The threat of a capital gains tax increase..
D. Forced to have pets..
E. Tenant "hardship" test (seriously, WTF).
... plus a few more but even the most mindless big state socialist should get the message by now.
@@voodo0983 Thought that was too ', triggering' for the subject audience..too much fact could tip them over the edge.
What do I think needs to be done to solve this crisis? As an immediate, *implementable* solution?
*FEWER PEOPLE COMING IN TO THIS COUNTRY*
Supply And Demand. Basic economics 101.
Strangely, these two completely fail to mention this....
Government and banks making more profits on rental sector. Landlords now pay tax on gross and not net income. Banks charging higher interest on mortgages. Properties have to be improved to achieve EPC C. Renters Reform Act means landlords at greater risk of voids/ loss due to damage/ difficult to recover own house but, still have to cover maintenance costs. The issue is successive governments have failed to build houses, high levels of immigration are compounding the shortage and it's easier to blame landlords rather than politicians owning the problem .
I am a Landlord. I keep the Rent as low as I can ( within reason ). It is not in my interest to keep on hiking up the Rent. This way the Family in my property can afford it, they will stay put and look after the property. The Letting Agent will also receive his monthly fee. So everyone is happy. I also give this Family ad hoc payments towards the Electric Bill. This 'model' works very well and everyone seems to be happy. If my costs do Spiral I will still do my best to keep the Rent as affordable as possible. Only hope I can keep on doing this as it works so well.
We use a similar tactic ,our rents are 2 years behind ,we do increase but we're two years behind ,so always cheaper ,if good tenant and looks after property, bad tenant, you know is going to cost 10k min to refurbish property after trashing it ,withholding rent ,and legals to evict where council backs non paying tenant, to point of bailiffs!! So increase rent at market value,We have long term (14years on average) good tenants and don't want to lose them we are fair and good landlords,but with all this government b/s may have to think of getting out ,why not a supercar tax,private yacht tax,private jet tax ,?
The U.K is not London.
The reasons rents are unaffordable is because of population increase as a result of mass immigration (demand outstrips supply) and government / central bank monestising £450 billion of debt to pay for unecessary health lockdowns significantly increasing the money supply (inflation) and reducing the purchasing power of our currency resulting in higher prices. Increasing benefits to pay for higher rents will just push up prices further increasing the number of people unable to afford the market rent. This mess has been created by government immigration and fiscal policy combined with central bank (Bank of England) monetary policy.
How can you talk about the housing crisis and not mention immigration.
It all boils down to supply and demand. Landlords can only put their rents up to what the market will pay , regardless of interest rates and changes in government policy, no fault evictions and section 24 etc are causing landlords to sell up making things worse for the very people the claim to be helping.
Build more private and social , kerb immigration to improve supply and demand ratio
The market will find a fairer level.
And immigrants are prepared to work 50 plus hours a week and generally don’t waste money on fags, booze and going out. This prices out the English working class. A harsh reality
The main reason of high rent is due to tax on gross income, hike in interest rate, estate agent management fees, management fee from freeholder.
If you want the absolute truth of why rents are progressively going up then ask a landlord who has operated in this sector for over 30 years and you’ll understand that it all comes down to decisions made by main government, they have over regulated the sector and in conjunction with completely destroying buy to let and high interest rates this may give you an idea of why the market is so challenging, this comes from a very fair landlord who believes in providing a fair service good accommodation and obviously a return on my investment otherwise it’s simply not worth being in the sector in the first place !!.
We have the least regulated rental market in Western Europe.
where has this government shown some really ambitious plans in regards to large scale social housing? I've seen them talk about targets of 1.5 million new homes over 5 years, and a certain amount of them need to be deemed "affordable housing" but that's just housing that has rental costs of 80% of the private sector. That's not the same as social housing.
Landlords are selling. Reducing supply and increasing demand.
Saved you eleven minutes.
Do you have any data to support that claim?
Your view is far too simplistic
More women working in construction building houses, not sitting around talking about it.
Don't hold your breath. They only want equity or better in the glamorous and well paid jobs. Not the dirty and low paid ones.
No supply. There, that's your answer.
Google 'section 24'.....that will you why.....and while you're at Google '18 year property cycle'.
Very few economists understand economics
Economics is irrelevant. If chicken feed goes up and flocks are being devastated by disease, egg prices rise. If locally and nationally landlords are leaving due to deliberate harassment for political aims, then costs, not inflation will dictate cost, choice and supply.
Cap rents to inflation but return tax relief to 40%.
What do you think needs to be done to solve this crisis?
Rent Control; see essay below (apologies, but it is not a policy that can be stated without history and empirical justification)
Land Value Tax is another, but is even more complex if we want the full Henry George model (which I think is brilliant, tax the owners of land not the sweat of labour).
But wouldn't rent controls and increased taxation drive more landlords away from the market, resulting in less rental stock?
@@aliasgur3342 Yes, but the properties don't just disappear; they are either sold to the sitting tenant as in the 1920s or purchased by local authorities at low prices, which means they can be updated and rented out as social housing or put back on the owner-occupier market.
The landlord has money to invest elsewhere in the economy, not land.
We have approximately the same property per capita as in the 1970s when it was 7% PRS. If we return from 21% to 7%, we will release 4 million-plus properties back on the market.
The losers will be landlords, but let's face it: they've had a good run since 1996; they still have capital, and even with a mortgage, the growth value of land has been above inflation until recently.
As land values fall, people under 40 can afford a house, as was the case from 1920 to the mid-1990s. Get rid of the 40-year mortgage and return to the old max of 25.
Houses should be homes, not commodified assets.
@@aliasgur3342@aliasgur3342 Property doesn't disappear. It changes from one sector (PRS) to another, i.e., to owner-occupier or social housing. In the 1920s, many landlords sold their properties to their sitting tenants as land values fell; in the 1920s, 1 million properties were sold to sitting tenants from their Landlords as they exited the market and put their money often on the Stock Market, which ironically inflated with all the new money and crashed in 1929 (though started in the US with an even bigger bubble).
In the 2020s, we currently have the same number of houses per capita as in the 1970s; the only difference is that many are owned by a few. The difference is that 4 million+ are owned by the PRS (the difference between the 1970s 7% and present 2024 21% PRS, i.e. 14% = 4 million+) and extracted from the market, causing scarcity, so if Rent Controls were put in place, as landlords exit the market, they could be either purchased or become social housing. Returning to a healthy 7% of PRS, 21% is not socially and/or politically healthy, especially with no rent caps.
We need less PRS stock, more available, fairly priced houses for purchase, and highly regulated Social housing for those who wish to rent.
Landlords are not the answer; they are rentiers who extract an asset from the market and ask someone else to pay the mortgage whilst not giving them a chance to save or purchase as rents stay high, so people can't save. This is not only cruel but also exploitative by extraction.
more tenants' rights and more regulations= higher prices. simple as that. prepare for much much higher prices
Where is the government going to build social housing? By taxing people even more?
Where is the government going to get skilled workers to build more housing? New startup are around 125,000 and falling. To achieve governments aim of building 300,000 homes, construction workers needs to be more than doubled.
Just like car insurance or anything else the government allows the private sector to set the market rate and thats what you pay accordingly to that.
The government or political party's I say all have private sector donors they have more say than voters that's why they donate
Greed
Just get a room mate.
Some landlords are paying taxes on the income that they don’t have. Section 24 is a joke.