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The cost of this will be passed straight onto the people renting anywhere demand is at least level with supply.Might force a few sales in low demand areas but I have my doubts.
Far better to tax the fuck out of airbnb style holiday lets and require the same standards as BnBs.
Well, of course it will be passed on, but probably not entirely.
I don't think forcing sales is a particular positive or negative thing - they are still houses and what's important is that they are being lived in, not that they are owner-occupied, IMO.
As a matter of principle I think that rent should be treated as income for tax purposes, even though it won't make a huge difference.
I think so many small landlords using b2l are so heavily leveraged thry have no choice but to pass it on, then that dictates the price as almost everyone else just follows the market in high demand areas.
I used to feel the same way around rents when they fairer but the market has gotten out of control, particularly in heavy holiday rental areas i think fuck that. As its resulted in renting becoming out of step with costs to buy in some areas.
I agree that all profit should be taxed but its a massive own goal with kipper fave waiting in the wings to take advantage. Renters seeing price rises won't blame landlords directly for this.
that dictates the price as almost everyone else just follows the market in high demand areas.
In high-demand areas this can be true, but that's not everywhere.
Ask yourself what is stopping rents from going up even faster than they are right now? Part of it is people's willingness and ability to pay.
A Land Value Tax would help with all of this, as would an additional tax on vacant property.
I broadly agree but the other parts of that cost model is the number of people looking to rent, amount of properties to rent, and the minimum cost of being able to offer them to rent.
If your costs go up, such as interest rate rises, increased legislation, or additional taxation then those on the margins have only two choices, put up prices or sell up. I saw it with the recent interest rate rises, properties sold at a discount with sitting tenants as the land lord could no longer afford the property.
What the rents are offered is dictated by what the majority for that property price point can afford. Increase rent beyond whats affordable and you will decrease the supply of renters.
Less renters, less properties getting rented, and if you are a marginal land lord then last thing you want is the property empty for any period of time so you have to sell, further reducing supply.
Once you start cutting out the bottom of the affordability end of that property type rents as an average can go up as the people left can afford to spend more on rent and there are less properties to rent reducing supply.
This is whats been happening with less and less young people even renting now, the bottom gets priced out.
It will push up rents, for sure, I just mean it won't be a 1:1 increase (most likely).
Well obviously as an average, some land lords will need or want to absorb some of it, some wont. But as I mentioned, the heavily leveraged or greedy ones in high demand areas will more than likely pass on more, as that's what happened with the interest rate rises.
I think if it goes up even 25% of the amount its still going to make a hell of a lot of renters unhappy at a time that the government should be avoiding that.
Working in the mortgage industry, part of it is also how lenders assess the income from the property when compared to its value. With interest rates having shot up the last few years (albeit coming back down somewhat recently) the stress calculations mean lenders want ever higher rent to cover the mortgages they have on the properties.
Doesn’t help that your average investor is usually borrowing the max of 75% LTV either, as you said.
Yeah the recent mortgage rises are a perfect example of what will happen, and I think you raise an interesting point that the lenders will put pressure on the land lords as well to increase rents to cover this.
While I don't like small B2L land lords I dislike large companies mass investing in the rental housing market due to the increased power their size gives them. I dont want to see B2L squeezed out for them as that's going to be much worse in the long run.
without also passing rent control, this just means the parasites will pass the cost directly to tenants