Monday, 13 March 2017

So how are those rent rises working out then?

When Obsborne increased SDLT rates by 3% for all purchasers except owner-occupiers from 1 April and then announced that higher rate income tax relief for landlords' mortgage interest would be phased out over three years, starting 1 April 2017, all the usual Homey lobby groups insisted that "landlords will just increase their rents".

Logic tells us that if anything, these measures will push down prices and rents slightly, although it is always difficult to disentangle this from other influences.

From today's City AM:

Rent increases for tenants across the UK have fallen to their lowest since 2013, new figures have shown, with prices in London dropping for the ninth month in a row.

Rents rose just one per cent to £1,190 in the year to February, the lowest rise since April 2013, figures from Landbay showed. In the capital, rents fell 0.5 per cent, although they were still as high as £1,882...

The lobbyists are keeping up the pressure though:

And a study by the Royal Institution of Chartered Surveyors (RICS) published last week suggested rents in the UK could rise by a fifth over the next five years, although tenants in the capital will be faced with a rise of 15 per cent.

Here's a fun bit from the linked article:

The research suggested a third of its respondents believed those on lower incomes are being pushed out of the private rental market, while 29 per cent blamed caps on housing benefits. Just over half of landlords it surveyed said they'd be prepared to rent properties to households receiving housing benefit if help was provided through central government which provided financial guarantees for both deposits and rent.

“We see this as a matter of public interest," said RICS chief executive Sean Tompkins.

"The housing market is falling increasingly out of step with the majority of household incomes. In the current climate, it can be hard enough for young professionals to make ends meet. But for those on benefits, the pressures may be insurmountable.

"Worryingly our figures show that as a result of a combination of economic pressures, more and more vulnerable tenants are being pushed out of the private rented sector. However, if government were to put in place additional support measures through the introduction of help to rent schemes, the door to the rental market may once again be opened for Britain’s most vulnerable.”

The utter, utter money grubbing shits.

Assuming landlords refuse to take housing benefit tenants any more, what will they do with the now vacant homes? Sell them to better of FTBs presumably. Supply then dwindles until landlords end up with the stark choice - rent them out to lower earners for lower rents or sell them etc, taxpayers save money on housing benefit subsidies. Win-win-win.


Lola said...

You know what? Hayek scorned all economists who didn't use 'logic'. Despite ('Brexit' [sic]) this it seems that the whole 'logic' thing is fast evaporating from public life.

ThomasBHall said...

"Help to rent"- I thought we already had this in HB? FFS.
Honestly- I really very rarely wish misfortune on others, but for these (Mark you put it very nicely) utter money grubbing shits I might be able to make an exception. A pox (tax?) on their houses!

mombers said...

Just you wait, the retaliatory rent rises are coming any minute - it's been less than 2 years since the tax change was announced! And of course if the changes hadn't been made, rents would have fallen even further so tenants have actually missed out.

Mark Wadsworth said...

L, to be honest logic only helps you so far with economic predictions, it's best to start by observing and then working out what the underlying logic is. A lot of the time people behave quite differently to what you expected.

TBH, I thought Help To Rent is just a crazy Lib Dem idea? But Housing Benefit is real enough.

M, yes, that's the spirit! I forgot that rents would have fallen 20%. But the people now constantly predicting massive rent rises have a historic track record of constantly predicting rent rises. It's to increase demand for housing.

Bayard said...

"It's to increase demand for housing."

I'd say it's to increase the demands that more housing is built, rather than the demand for housing, which isn't a demand for housing per se, but only for cheap housing in expensive places that can be sold expensively down the line. "it is not cheap things that we want to possess, but expensive things that cost a lot less".