Realist, not conformist analysis of the latest financial, business and political news

Government Proposes Rent Increase

Probably not what thy intended, but rent increases will be the result. Because of supply and demand.

Govt announced today plans to prevent landlords from ending leases easily. Currently landlords can ask a tenant to leave by giving 2 months notice. There is a proper form to do this but it’s pretty straightforward. New government proposals will remove that right, instead requiring court approval for termination and requiring evidence of reason to terminate.

Starting from the premise that generally landlords are greedy therefore interested in maximising revenue from their investment. They therefore really do want their property occupied, not empty waiting to be re-let, and so want to keep good tenants as long as possible.

Assuming this general lack of landlord altruism leads to the conclusion that the huge majority of any current terminations are very likely to be because either the tenant is in some way problematic, they need the property themselves, or want to sell it. Note that all of these reasons are valid as far as the new proposed court proceeding are concerned, just requiring a higher burden of proof, taking another couple of months and a costing a wodge of court fees.

Increased actual costs to end a lease plus extra cost through less flexibility for the landlord will result in reduced supply and – economics 101 – higher rents.

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Jonathan Harston
Jonathan Harston
5 years ago

If my town is any guide, they’ll end up as holiday cottages.

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