There\u2019s a story\nin the Times today that I like, not because it says anything especially\nsurprising, but because it demonstrates a principle so clearly. The headline is\n\u201cRenters may face price rises as landlords cash in on property\u201d and the opening\nparagraphs read:<\/p>\n\n\n\n
\u201cHundreds of\nthousands of landlords are planning to cash in big gains from a decade of\nrising property prices as the government\u2019s assault on buy-to-let encourages an\nexodus from the market.<\/p>\n\n\n\n
More than one in four landlords intend to sell at least one of their properties over the next year, risking a crisis for tenants, according to a survey by the Residential Landlords Association (RLA).\u201d<\/p>\n\n\n\n
https:\/\/www.thetimes.co.uk\/edition\/news\/renters-may-face-price-rises-as-landlords-cash-in-on-property-znjlzdmnq<\/a><\/p>\n\n\n\n The underlying\nproblem is that the government is in the process of removing some tax breaks\nfor private landlords. It also recently announced proposals intended to provide\ngreater protection from eviction for tenants.<\/p>\n\n\n\n That increased\nlevel of protection may make sense for the government (including local\ngovernment) in the longer term, since if families with children become homeless\nthere is an obligation on the public authorities to rehouse them, which clearly\nhas a cost. Nonetheless, it still increases the risks and hence ultimately\ncosts for the landlords (and consequently tenants), which may make some\nreconsider their investment.<\/p>\n\n\n\n Meanwhile, the\nreduction in tax allowances is one of those things that may instinctively\nappeal to many, who might feel that more tax on landlords can\u2019t be a bad thing.\nHowever, the return that investors expect on their money is dictated by other\nfactors altogether. If the difference cannot be recouped through increased\nrents (bad for tenants) then the owners will sell up and put the proceeds\nelsewhere, leading to a decrease in supply and a resulting increase in rents\n(bad for tenants). If supply and demand were more evenly matched then we might\nexpect an offset from the increased supply of property for sale, leading to a\ndrop in prices, but in the parts of the country where the housing market is\ntightest this won\u2019t be big enough to make property affordable for those who\nrent.<\/p>\n\n\n\n I suspect\npeople tend to see tax deductions as a benefit for the landlord rather than\nwhat it really is, which is a subsidy from the government to private tenants.\nIt\u2019s perfectly possible to argue that such subsidies are a bad thing, but if\nthat is the reason for the policy change then the government ought to explain\nit clearly. And of course it isn\u2019t the reason \u2013 I doubt very much that they\nthought it through at all. At best some thicky in the Treasury might have\nthought it would raise tax revenue, when anybody but a jackass can see that it\nwon\u2019t.<\/p>\n\n\n\n I\u2019m always\npuzzled by situations in which governments could achieve the results that they\nwant at no cost to themselves (meaning us), but choose to do something else\ninstead. The only way that the costs of housing will be reduced is to increase supply\nof housing in the places it is needed most. This means both relaxing and\nspeeding up the planning process, which can be done with the flourish of a pen\n(or email: can you flourish an email?). Apparently that is far too easy.<\/p>\n","protected":false},"excerpt":{"rendered":" There\u2019s a story in the Times today that I like, not because it says anything especially surprising, but because it demonstrates a principle so clearly. The headline is \u201cRenters may face price rises as landlords cash in on property\u201d and the opening paragraphs read: \u201cHundreds of thousands of landlords are planning to cash in big … Continue reading Unintended consequences.<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/glennricher.com\/index.php\/wp-json\/wp\/v2\/posts\/61"}],"collection":[{"href":"https:\/\/glennricher.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/glennricher.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/glennricher.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/glennricher.com\/index.php\/wp-json\/wp\/v2\/comments?post=61"}],"version-history":[{"count":1,"href":"https:\/\/glennricher.com\/index.php\/wp-json\/wp\/v2\/posts\/61\/revisions"}],"predecessor-version":[{"id":63,"href":"https:\/\/glennricher.com\/index.php\/wp-json\/wp\/v2\/posts\/61\/revisions\/63"}],"wp:attachment":[{"href":"https:\/\/glennricher.com\/index.php\/wp-json\/wp\/v2\/media?parent=61"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/glennricher.com\/index.php\/wp-json\/wp\/v2\/categories?post=61"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/glennricher.com\/index.php\/wp-json\/wp\/v2\/tags?post=61"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}