Rachel Reeves considering freeze of private rent?

[Locutus2000]

It's being widely reported suggesting the Guardians original article is correct.

Rachel Reeves is considering a one-year freeze on private rents to help tenants with the cost of living amongst the fallout from the Iran war.

I find the concept of rent control appealing but there's evidence they produce mixed results.

What does MN think? YABU - rent controls bad, YANBU - rent controls good

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

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

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?

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

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.

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.

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.

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

As previously mentioned, institutional landlords ie pension funds are minimal players in the corporate rental market.

housing associations are commonly referred to as corporate landlords, yes. As in “in the business of being a landlord”

No, they are not. They are literally Registered Social Landlords which is completely different. We will have to agree to disagree.

Why do you think a registered social housing provider means you’re not a corporate landlord ?

RSH just means you are on a register of landlords- L&G etc are also on the RSH

corporate landlord doesn’t have an official or agreed definition.

In no other business would you suggest that costs cannot be offset against income from the business. Do you know how ludicrous that sounds.

If you're talking about mortgage repayments, buy to let is regarded as an investment activity, not a business, in tax law. That's why you don't pay NIC on the profits unlike a business where you would pay NIC. There's no relief for loan repayments/interest on other forms of investment, such as if someone borrows to finance a share portfolio, so really, buying a property, i.e. buying an investment, is the same.

If you're that aggrieved, you can convert your property into limited company ownership, in which case the interest would be fully allowed against the rental income as limited companies are taxed differently.

Which is why there is an ever growing housing crisis . . .

I don't think she will either.

I heard an analysis today that RR had previously "floated" policy changes in the press to gauge reaction. If that is what is going on, I think the kickback might derail this.

However, the rumours alone are spooking the sector as witnessed by @Xiaoxiong parents.

I ran into a distressed colleague last week whose LL has evicted her and decided to sell up, because the renters' rights law (which I support). This on top will add to more, I think.

My colleague cannot afford to buy her current home and as PP said, there is hardly anywhere to rent.

You know the Renter’s Rights Bill js much the same as what the previous government tried to implement? Ie Abolishing section 21 evictions, giving tenants more rights to challenge rent increases, rolling tenancies rather than fixed end dates.

I agree with this.

I don't know what conditions should be put in place, but landlords should be encouraged. Given that there isn't enough social housing due to the Tories selling it off. If housing association management of private rental was beneficial to landlords (took the management off their hands, paid a reasonable rent, ensured regular maintenance, guaranteed rent) many, many of us would snap it up. It would be safer for the tenant and the landlord. It would encourage investment. Because there will always be a section of the population who can't or don't want to buy.

6 years ago, when I moved out of my flat, I tried to contact my local council, because I'd heard there was some way I could pass it over to the management of the council (housing association I guess). I got a BIG run around, was told this wasn't feasible, they didn't offer it, my flat wasn't suitable (which was it?). They more or less told me to F Off. So I rented it via an agency who manage it. TWO years after my enquiries to the council, the SAME person who sent me away with a flea in my ear, wrote to me, offering to take the flat off my hands. As if it had been sitting empty for 2 years. Useless.

I don't think it will happen.

What I would like to see is maximum increases each year once you sign a tenancy.

This is absolutely true, I’m a banker looking after social housing associations. The reason they aren’t building anymore houses is because:

1. They are spending all their cash getting their existing stock up to the required EPC standards.

2. They are still dealing with the 7% rent increase cap imposed when inflation was in double digits.

3. They are not going to the capital markets to raise cash because gilt yields are too high and volatile.

4. Building costs (labour and materials) are astonishingly expensive.

Most of them have really scaled back their development plans and that’s not expected to change any time soon.

That's not what I said now. I said: "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."

No, I'm not going to do anything other than ponder my thoughts based on a rumour in the paper. What I meant by what I said was that IF this actually happens, I'll raise them ASAP beforehand (if we even get given a chance to), even though I hadn't planned any raises for this year. This is because I don't trust Labour to limit it to 1yr, and one of my properties is already well under market rates, AND I've had to foot a repair bill for over £1K due to the tenant's utter stupidity.

Anyway, I digress. By how much, you ask? I'm not sure what that's got to do with you and out of context it will mean very little to you but as it happens it would be by £25 per month.

I agree, this would be fair. I often read of LLs putting in HUGE increases each year, makes my eyes water & I'm a LL myself.

Long overdue. Mortgage market needs to be reformed too.

In our area all it has done is push the price of rental up.

I'm not suggesting they pass it all on, no. But if it's no longer profitable they'll sell up. If they sell up there are fewer houses in the rental market and supply and demand will push the prices up.

It's all very well saying they should all be housing association but what about those people renting for work ? The medical staff on rotation? The contractors on 6 month contracts? Where are they going to go?
The new bill says the rent can only be increased to market value from May so guess what's happened before May? The people who have been ticking along below market value for years are now seeing big increases.

That was my first thought.