Nationalisation and confiscation of private rented property
Well, don’t say I always try to paint investing in the private rented sector as being totally without risk!
NATIONALISATION AND CONFISCATION OF PRIVATE RENTED PROPERTY
So, here I go again with this look at the possibility of nationalisation and even confiscation of private rented property.
Many of you will be saying that this is not possible, but then people back in 2019 would have said similar things about the “Covid Cult”.
Back then, people would surely have said, “Surely no government would force all their people to get a risky new quackcine to protect themselves from a “disease” that only kills about one in 2,000 people, of whom the average age at death is 82 and where at least 95% already had at least one of more serious underlying conditions. And then force people to have the jab or lose their rights to engage in normal life, visit a restaurant, gym, access healthcare, attend school and even vote.”
Bu that is exactly what has happened – and under the “New Normal” and “Build Back Better”, the mantra of the new technocratic elite, as set out by their leading intellectual, thinker and head of the World Economic Forum, Klaus Schwab, anything is possible now. (For a good guide to the plans, this is a good starting place: https://winteroak.org.uk/2020/10/05/klaus-schwab-and-his-great-fascist-reset/?fbclid=IwAR06RmkrXbyTClXm3yiT6LNWs-L1jBSyUr8dFWEinhGVy0DUva6agheyjyE)
But back to the private rented sector.
The story starts in Berlin.
A referendum is to be held called the “Expropriate Deutsche Wohnen &Co” in that city. Supported by leftist housing groups, trade unions and Green political parties, it is a vote on a proposal to forcibly purchase 240,000 properties owned by that city’s largest landlords, of whom the largest is Deutsche Wohnen & Co.
This company has done very well over the years, with its shares posting an average total return of 21% a year, well above the 11% market average.
Critics accuse it of running down properties or using renovations to significantly hike rents.
The movement’s slogan, “no profits with our rents” is interesting, as without profits, these numpties might wonder who would invest and build any housing anyway. But, economics and indeed logic, is often lost on Marxists.
But even if the referendum does not succeed, there is an expectation in Germany that there will be further efforts to nationalise the stock of private rented accommodation.
They have form here. A year ago, Berlin’s government passed a law setting out a five year period of rent control, though it was later declared unconstitutional and tenants made to pay back the rent savings to their landlords.
NATIONALISATION OF PRIVATE RENTED PROPERTY
Even worse, the intention of these groups is not to pay market value as compensation.
After all, where would the money to do that come from.
The referendum and general political background to this in Germany has clobbered the share prices of quoted German residential renting property companies.
Of course, the solution to rent increases is not rent control. This can only lead to a deterioration in the quality and quantity of the rented stock, as has been shown everywhere it has ever been tried. One famous Swedish economist, Asser Lundbeck, memorably said, “The best way to destroy a city is to bomb it, the second best way is by imposing rent controls”.
Of course, the solution is more housing of the right kind. That needs planning laws to be liberal, and too often they are not – hence the problem.
The Berlin campaigners also appear not to have considered that at current rental levels and operational costs their local government would really have a struggle breaking-even if they had to manage the private rental estate and develop new housing.
To some degree, some people may see this as a local issue for Berlin. The city has always had a big rented sector and a radical left wing populace. But it could be more than this.
Right now, as we have seen in the UK, there is a clamour from institutional pensions funds and other investors to pile into the private rented sector, hungry for the relatively reliable yields that are on offer. This, for them, is now ever more attractive as bond yields shrink, which itself is a result of quantitative easing and the printing of money to deal with the exaggerated Covid crisis.
The sort of development we have seen in Berlin has made them a little more nervous.
Right here in the UK, it will surprise no one to read that an advisory board to the Scottish Government has called on them to move from a “housing land market driven by private profit to one driven by public interest”.
In the UK, this might not end nor start with an attack on institutional investors.
In fact, in the UK, I think this is unlikely.
The UK government has spent the last 15 years actively encouraging big investors into private rent with all sorts of financial incentives, whilst at the same time, increasing the tax burden and regulatory regime faced by small landlords, thus making private rent less and less attractive.
PRIVATE RENTED PROPERTY – DIFFERENT IN THE UK
Indeed it is my view that the possible intention of some in our government is to remove smaller, private investors from buying to let completely.
Maybe that is why they are requiring that all let property will soon need to meet an energy performance certificate of C. For the army of small private landlords, who tend to have a lot of hard-to-upgrade older properties, the costs of doing this are huge.
If the government mandates this and offers no help to do it, which I think is eminently possible, then it will bankrupt many landlords. I have written more about this at a previous post: https://www.lettingfocus.com/blogs/2021/06/energy-performance-certificates-of-c-for-let-properties-by-2025/
It will also put the skids on the prices of Victorian houses as a flood of them could hit the market as landlords give up on renting.
Of course, the big investors, who have built and let mainly shiny new flats, achieving a grade C on an EPC is no issue. Most will score that already.
Non-landlord owners should not smile either as this could be the thin end of the wedge. They too could be required to meet an EPC grade of “C” and again, it could be that no financial help from the state will be forthcoming. This could be explained by “Hey, we are in a war on Covid/ Global Warming/ Afghan Sponsored Terrorism/ Other and we in government have no money to help”.
Hey presto, the middle class suddenly find their wealth has been clobbered.
But they should not be surprised.
Klaus Schwab has said many times about his vision for a future society that all this would be great. His most famous quote is, “You Will Own Nothing, But You Will Be Happy”.
Of course, if you don’t own anything in the future, then you might wonder who does?
Well, Klaus’s friend Bill Gates, has been busy investing in infrastructure around private aircraft, airfields and servicing.
Perhaps it is time people woke up and followed the money, both where it is invested and by whom.
Much of Bill’s money has been invested on the Covid Cult with ownership stakes / grants to the media and funding for any half decent scientific institution concerned with virology and vaccines.
It is really time for people to wake up from slumber, stop watching the main stream news and do their own research before much more of it is removed from the Internet.
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