The Things Non-Landlords Say
It is interesting to hear the comments of people who I know who are not landlords but who glean bits of news from mainstream media about the private rented sector.
They say things like “It must be so hard for you landlords with interest rates going up!”
I tell them, “No, it is not a problem, because if you have bought in the right place where there is strong rental demand, you will be able to put up rents to compensate somewhat. Providing people’s wages are going up a bit, you can still put up the rent a bit. Sure, we appreciate these are tough times for some tenants (though not all) and you may not be able to put up rents as much as the rate of inflation, but if you picked the right tenants, they will be able to afford the rent increases OK”.
The fact is if inflation is up, interest rates will probably be up too, (as they are now), providing the response of the government to the inflationary conditions is monetary based – and it usually is, at least in part.
Rising interest rates will mean it is harder for people to buy property as they can afford it less, so more will be renting instead. Still more people will be worried about the economic outlook and will also defer any potential purchase too and choose to remain as renters for longer. Both factors, all other things being equal, will increase the demand for rented accommodation and hence rents.
Sounds good to me.
My brother, an envious type at times, recently delighted in the latest news that us landlords may face higher taxes in the new budget.
Hey, what’s new? Isn’t that the same every budget!
I had to point out to him that if that makes more landlords run for the exit then the supply of decent accommodation will fall and rents will rise further still. What is not to like?
You see, the key thing about this private rental business is that it really just comes down to doing the basics and all the small things well.
These things are buying in the right place, buying the right type of property, taking great care to get the right tenants, looking after your properties with good maintenance programmes and keeping costs down.
The rest of it – the taxes, the regulation is just “noise”. The amount of noise there is will impact how many landlords are “in the game”, if there is too much noise, the non-serious landlords exit and rents go up.
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