Rent controls - good or bad?

[perplexed]

I know the proposal is to cap rents....

 

I'm saying that the costs to the landlord won't be capped. So outgoings, which are often quite significant, are subject to potentially unlimited increases.

[Cyclone]

They support population growth by encouraging immigration into the UK and increasing a families income if they have children. If someone wants four children but can only afford to support two, it is very likely they will only have two, if government says we will step in and support any children you can't afford, it will encourage people to have more.

 

 

Supply and demand is also restrained by affordability, when people can't afford something demand diminishes, government once again step with HB which keeps prices artificially high, without HB prices would have to fall because fewer people would be able to afford the rents demanded by landlords.

 

HB props up the very bottom of the market.

 

And the rate of birth in the UK is <2 per couple, so if it wasn't for immigration our population would actually be falling.

 

---------- Post added 02-05-2015 at 09:28 ----------

 

Thats what were talking about here, should landlords set the market or not.

 

They don't. That's just something you made up.

 

---------- Post added 02-05-2015 at 09:30 ----------

 

Thats why all this supply and demand tosh is just an excuse for landlords to increase rents above and beyond what they should be.

 

SHOULD?

 

As if there is some charge for rent that is 'correct'.

 

£2 on amazon and you can rejoin the discussion;

http://www.amazon.co.uk/Economics-Minutes-Understanding-Everything-Explained-ebook/dp/B00T1ZH904/ref=sr_1_2?ie=UTF8&qid=1430555389&sr=8-2&keywords=economics+101

 

---------- Post added 02-05-2015 at 09:31 ----------

 

I think the difference between housing and other items is that you don't have great deal of choice. You need to live SOMEWHERE but you might not need to buy cake (to use a analogy from another thread).

 

So people will have to pay the going rate. They can't not pay it else they'd be homeless so natural competition here have almost no meaning. If you NEED something you have to pay the price asked for. Also, not many landlords are going to charge under the rates charged by their peers, why would they? So there's no undercutting and no competition especially not in the cheapest areas as once you are at the cheapest houses in the area there is no where else for you to go except the streets, and that is why we need short term rent controls and long term commitment to building more social housing.

 

The reason there is no undercutting is because supply is constrained and demand is high. Thus prices rise. Market economics.

If houses were standing empty due to over supply and under demand then prices would fall.

[loraward]

HB props up the very bottom of the market.

 

 

And the very bottom supports everything above it, when the bottom collapses everything above it collapses.

[Cyclone]

So... real figures, all repayment... mortgage payment of £371, rent of £570. Mortgage payment of £568, rent of £1,100 (other outgoings for this property, including a hefty service charge amounting to around £200 per month!), mortgage payment of £750, rent of £850 (newly acquired property, advertised at a sensationally low price as I thought it would only appeal to a niche, mistake there from me!)... if the figures aren't working monthly and you're only banking on capital appreciation then I don't see how you can build up a contingency fund for repairs when they're needed, it's just a money-pit for you with a pay-off in, say, 25 years... and that's when Landlords start to let their properties go to wrack and ruin... if your properties are profitable then you will love them, if they are only trouble for you, then you will hate them.

 

Perhaps Walkley is a bad example, but if you were looking at BTL there today it would be nearly impossible to turn a profit.

 

---------- Post added 02-05-2015 at 09:34 ----------

 

And the very bottom supports everything above it, when the bottom collapses everything above it collapses.

 

Totally. But propping up the bottom is not making the prices higher up continue to rise, HB hasn't gone up way over inflation for the last decade, rents have though.

[loraward]

HB props up the very bottom of the market.

 

And the rate of birth in the UK is <2 per couple, so if it wasn't for immigration our population would actually be falling.

 

Yes it would but quoting the average birth rate doesn't change the fact that some people with large families wouldn't have large families if they didn't have access to benefits. Just think of all those cheap affordable houses that would exist in a country with a falling population.

 

---------- Post added 02-05-2015 at 09:37 ----------

 

 

Totally. But propping up the bottom is not making the prices higher up continue to rise, HB hasn't gone up way over inflation for the last decade, rents have though.

 

Of course it does, if you increase the price at the bottom the price higher up will also rise. HB made buy to let viable, and without buy to let there wouldn't have been a property bubble, prices would be lower so rents would be lower.

Edited May 2, 2015 by loraward

[Cyclone]

HB hasn't increased though. So it's clearly not what is allowing the increase of rents that are well above the HB threshold.

 

Do you know any BTL landlord that lets to people who claim HB?

[loraward]

HB hasn't increased though. So it's clearly not what is allowing the increase of rents that are well above the HB threshold.

 

Do you know any BTL landlord that lets to people who claim HB?

 

Yes.

 

A fifth of all households claim HB.

[Hippogriff]

Do you know any BTL landlord that lets to people who claim HB?

 

Yes. Just the one, though... and I'm basically stuck with this Tenant, I do realise that. LHA doesn't go up and her wage doesn't go up, so the rent doesn't go up (there would be no point in trying, a special case). The positive is that she looks after the house and she will be there long-term. The negative is that she doesn't pay her top-up on a regular basis and needs chasing every month... but it always eventually arrives (to date) and there are no arrears.

[I1L2T3]

Perhaps Walkley is a bad example, but if you were looking at BTL there today it would be nearly impossible to turn a profit.

 

Very true but people are also looking for short-term and/or long-term capital gains too. Losing a couple of grand a year on a £100,000 houses isn't a bad deal if you could exit 3, 5 or 10 years later with a net capital gain of £100,000. Many people who bought 1998-2002 and exited at the right time will have achieved spectacular capital gains.

 

Can that be repeated again? I totally share your pessimism about the viability of entering that sector now.

[go4it]

Thats why all this supply and demand tosh is just an excuse for landlords to increase rents above and beyond what they should be.

 

As a business man yourself, how can you not see the relevance of supply and demand here?

 

If you own a one bed flat in London opposite Hyde Park, the demand for rental would be huge. But the supply is low, there are not that many flats up for rent. So you basically can set your rent. Why rent out at £1000 per month when 50 people are willing to pay £5000 per month?

 

Then because people see that someone is getting good money for their flat, they decide to rent theirs out as well. More will be supplied at the higher price.

 

A property is only worth what someone is willing to pay for it.

 

---------- Post added 02-05-2015 at 12:48 ----------

 

 

So what are you going to do if rent increases are capped? Make less money i suppose.

 

As a businessman I am guessing here that you make your money as a consultant, telling people what to do and then charge them for it. You seem very very adverse to actually making money yourself, or letting anyone else dare make a profit.