Rachel Reeves considering freeze of private rent?

Oh my goodness! Housing Associations are not corporate landlords. They are Registered Social Landlords and basically charities. They manage capital and debt differently than actual corporate landlords. I think we are talking at crossed purposes

I can tell you the housing sector been creating vehicles specifically to sweep up these landlord exits for years.

rented stock has excellent IRR/ payback/ npv /whatever return you use at volume. It’s low risk and the demand is unlimited alongside an appropriate pricing structure.

The original point was that a poster was suggesting that BTL landlords were being greedy raising rents when there was no mortgage and hence they weren't impacted by interest rate rises. I explained that there was of course a huge opportunity cost of owning an asset and not maximising return, especially with the cost of capital being so high.

You then I believe suggested this wouldn't impact corporate/larger landlords the same which I disagreed with. Yes, they will be more insulated from shocks and potentially have more sources for capital but ultimately high cost of capital impacts everybody and will discourage people and bodies from investing in anything that can't at least match other available opportunities. There will always be a bit of hedging etc going on but we need more than that to replace the droves of private small scale landlords leaving the sector.

not at all. Housing associations (corporate landlords) check their annual accounts, it’s published.

my current organisation- one of the uks biggest employers- hasn’t changed its WACC for at least 2 years. There is no change that impacts their investment decisions.

That is so beyond the norm I struggle to believe it's true. You just have worked for 6 exceptional organisations

Plus- again, what are you even applying it to when you say it’s a problem?
Corporate landlords buying existing open market BTl stock as landlords leave? Corporate landlords building new rented stock?

of the 6 companies I’ve worked for in the last 15 years, WACC has moved less than 1%

WACC is almost always heavily influenced by interest rates. I never suggested they borrow separately for each investment.

I think this is getting a bit niche and off topic.

Institutional investors aren't going to effectively replace smaller BTL landlords leaving the market. Larger, corporate landlords may be more effective but will be highly constrained by the cost of capital in order to maintain profit margins etc. This is why despite growth in the number of larger landlords the supply of housing available has shrunk significantly and the range of housing is different

This isn’t really how it works. Cost of capital (generally WACC) is the companies COC, not general interest rates. Institutional landlords don’t borrow a fresh for each investment, their loan portfolio be will long term and well established.

institutional investors ie pension funds are a small part of the rental market in theUK. as I said above, they entered 8,10 years ago and haven’t found it particularly successful for them and haven’t grown their maker share at the rate expected.

Put simply, all capital has a cost. It's either the cost of borrowing (I e. Interest rates) or the opportunity cost of capital you own being utilised elsewhere.

Institutional investors literally look for the best investment. They have entered the private rental market because it is a useful diversification and shields them from some of the risks and volatility of other investments. The fact that interest rates are high will impact their decision making as will other opportunities. Only certain types of property and investment will meet their threshold

Larger landlords are more insulated but they are also more strategic in what they buy and where. This will lead to changes in the supply of property available often to the detrimental of the renters. If you're looking for a nice family home to let in a village then you will increasingly be out of luck

you’re not defining how you’re applying cost of capital to this situation. I’ve worked in real estate development for a long time and it’s rare for an opportunity like a new rental / shared ownership / market rent / market sale mix to not meet cost of capital, which is much lower than internal hurdle rates.

Institutional investors have entered and now slowed down entering the market, and represent a really small % of rentals (if you’re referring to your L&Gs, Lloyd’s etc)

large landlords are insulated from the shocks BTl landlords can’t cope with in a number of ways— volume, asset valuation methodology, cashflow availability.

We privately rent and I disagree with it - it was hard enough to get a rental there are less around as very little incentive for landlords to let

Def sign ownership of your property to your kids in enough time not to have to sell the house for care ... or be liable for IHT

I know what your saying is right, but as a home owner there will also be the expectation for that to fund elderly care - whilst those who don't own their home will be funded by the state. But that's a whole other discussion!!

The government have certain groups of people who they believe their voters have no sympathy for (landlords, private school parents, higher rate tax payers, farmers etc) who they feel they can shaft and no one really minds. That this doesn’t raise that much money is neither here nor there. Someone needs to have the finger pointed at them apparently and I suppose it is better than it being pointed at people on benefits or asylum seekers like other parties do. Notice no one points the finger at themselves, billionaires, the aristocrats that own every scrap of land and so on.

The problem is she’s not an economist and has a fairly shaky cv. Was pretty much customer service

More punishment for the people who are trying to make their assets work while being bludgeoned by increasing mortgage rates. She won’t be happy until everyone is sponging off the state because they’ve been unable to save any money.

i can’t wait for labour to come up with an idea that’s actually about generating wealth and opportunity rather than yet another Trotskyist redistribution of wealth.
signed: small business owner who has just had to make two people redundant due to a downturn

Well Labour are doing all they can to reduce available housing stock for renters. Landlords are simply selling up lock stock barrel, its just not worth it. Labour are idiotic, workers and renters suffer.

Sounds great. Private landlords shaft the working classes.

I don’t think she will do it.

Rent controls being counterproductive is something economists across the spectrum agree on. So I doubt that she or the Treasury would want to do it. If they did want to do it, they would know that the IMF, bond markets etc. would have a freak out if they did.

So even if she wanted to do it for short term political advantage, she can’t.

I still think you don't get it. Cost of capital is a concern to everyone. Large, institutional Landlords face the same issue at a higher level. Ultimately they need to be convinced that putting their money in the private rental sector will yield the best return compared to other options. Arguably they are more profit driven than traditional BTL Landlords.

It's also really important to note that where institutional investors are entering the market, they are favouring built to rent homes as opposed to traditional BTLs. These tend to be flats and 84% are in cities. They aren't going to be useful for lots of tenants looking for a different housing type or location

Nearly all negative aspects of rent control, come from limited implementation. Universal rent control for all housing has little chance of any of those problems.

It should have been done long ago, and should be permanent. House prices should have been controlled long ago as well. But we are still living in a primitive system requiring never ending magical increases. We won't evolve and become better for a very long time unfortunately.

you’re going to raise your tenants rents (by how much?) due to a rumour in the paper?

I had planned to NOT raise any rents this year on my rentals, but due to this, I'm likely to raise them ASAP, as I don't trust Labour not to stick at a 1yr freeze.

I do strongly disagree that the Government put so many restrictions on LLs, as if we're the enemy, despite us providing an essential service, all at our own financial risk. We're now taxed more too, just for being LLs. No other private business is scrutinised in this way, to my knowledge.

Oh yes, we can absorb the cost so they can't carry on funding, supporting and enabling those narcissistic word leaders to carry on with their war & genocides in the middle East.