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The UK made renting property a lot less lucrative a few years ago. Something about the tax position of letting mortgaged property. That meant landlords sold the

The UK made renting property a lot less lucrative a few years ago. Something about the tax position of letting mortgaged property. That meant landlords sold their houses - which I believe was broadly the point - and thus there are fewer places to rent and the cost of renting has increased to the new point of stability. I think this probably has decreased house prices to some extent, but people are really insanely reluctant to sell a house for less than they bought it for so lots will wait for years before accepting the change. It's probably good times to be buying an ex-rental to live in and getting better as mortgage rates fall.

dustincoates 2y ago
A similar thing has happened in France, where the government has restricted the rental of less energy efficient dwellings[0]. This is generally a good thing for the environment, but it has already had an effect on rental prices as those apartments are now taken off the market. The exact impact is a little hard to work out, because, at least in Paris, it's also coincided with apartment owners wanting to hold on to empty apartments to rent them for the Olympics rather than to locals. 0: https://www.connexionfrance.com/practical/timetable-for-new-energy-linked-restrictions-for-homes-in-france/199184#:~:text=From%20January%201%2C%202025%20rental,to%20250%20kWh%20per%20m%C2%B2 https://www.connexionfrance.com/practical/timetable-for-new-....
- Rinzler89 2y ago
  >apartment owners wanting to hold on to empty apartments to rent them for the Olympics rather than to locals. Sounds like something that can be fixed with laws. Edit: would you mind explaining your downvotes with arguments please? thanks.
  - throwaway1105q 2y ago
    We're talking about France, fix the law too much and heads will roll, or at least cars burn.
    - Rinzler89 2y ago
      Why would people violently protest against taxing empty real-estate that's not occupied by locals? I'm not French but IMHO, Airbnb style short term renting for tourst purposes should come with hefty taxes because housing should always prioritize the locals who live, work, have families and pay taxes there, not wealthy foreigners on vacation.
      - throwaway1105q 2y ago
        Because it's the locals who own it, even if they live elsewhere in the city. It's probably their pension income. Flats are usually owned personally by small scale owners in Europe, it's not like the huge funds and corporations in US. They are not poor but also not rich, it's work even if it's rented long term, and a lot of work if short term.
        Rinzler89 2y ago
        >It's probably their pension income Sucks for them I guess. Maybe they should have diversified and invested in stocks or bonds instead of going all-in in housing-for-rent "investment" and complaining it doesn't turn up to be a huge profit making scheme like they expected, and expect the government to cover their losses. Someone's housing shouldn't be someone else's for-profit side-hustle gamble. It's why housing is such a mess in the first place. You can't have housing be affordable AND provide hefty profit returns in private pockets at the same time. Those will always be in contradiction at odds with each other in capitalism. Honestly, I expected better from the socialist French, that they would have solved affordable housing for the masses.
        throwaway1105q 2y ago
        Your mistake is assuming France is socialist just because of its relatively generous welfare. It's actually neoliberal capitalism with strong preference for large corporations. And that's why this would lead to a protest or at least voting preference shift - it'd be taking one of the last remaining assets in the hands of the middle class.
  - dustincoates 2y ago
    I'm not sure it's something the government wants to or can fix. Many apartments that are being rented are those that house people otherwise, Paris being very well known for emptying out in July/August. For those that are being held back to rent, it can probably be hard to know what's the truth, "we didn't find a tenant" versus "we didn't want to find a tenant." Also, I think there's also a benefit to the government, as they want to have this empty short-term housing stock available for tourists coming in. A lot of money is being invested in the games, it's important to get the tourism money to make it profitable.
- physicsguy 2y ago
  That's also happened in the UK at the same time, but it's actually very difficult to bring many of the UK's pre-1930s households up to the minimum level without gutting the property and having it vacant for a period.
rahimnathwani 2y ago
Something about the tax position of letting mortgaged property. EDIT: I had misremembered. Landlords can still get a tax deduction for mortgage interest, but only at the 20% rate, not at their marginal tax rate. For most landlords with mortgages, this probably halves the tax credit. In the UK, if a private landlord receives £1000 in rent, and pays £800 in mortgage interest, they pay tax on the whole £1000, not just on the money they made. There are reasonable arguments on both sides: A) Why should a landlord be able to deduct mortgage interest from their income, for tax purposes, when owner-occupiers cannot? B) Why should a landlord be unable to deduct business expenses from revenue before calculating taxable profit, when all other businesses can?
- thraxil 2y ago
  Wouldn't a reasonable resolution to the conflict between A and B be to instead allow owner-occupiers to deduct mortgage interest from their income for tax purposes?
  - rahimnathwani 2y ago
    That just shifts the perceived inequity to: C) Why can homeowners deduct mortgage interest costs, whilst renters cannot deduct rent costs?
- lkdfjlkdfjlg 2y ago
  > Why should a landlord be unable to deduct business expenses from revenue before calculating taxable profit, when all other businesses can? I think you nailed it. This is effectively the government saying "renting is not a business". Think about it. The ability to "deduct expenses" is one of the characteristics of businesses. Individuals also can't deduct rent, food etc from their taxes.
  - rahimnathwani 2y ago
    This is effectively the government saying "renting is not a business". Yes, but only if you're an individual landlord. If you register a company and buy the property through that, the normal rules apply and all interest expense is deductible. Of course, the mortgage might be harder to get or more expensive, as it's no longer secured on an individual's assets and future income.
pydry 2y ago
Rents have been climbing for the same steady rate they have for years now. Shrinking supply meets increasing demand. Nothing about that has changed recently. The recent reforms did swap out some landlords for homeowners. It didnt undo the war on affordable housing it just prevented landlords from profiting as much from it. Which is a good thing, even if some media outlets owned by landlords do like to pretend that euthanizing the buy to let landlord is bad renters.
downrightmike 2y ago
Its not stability, it is collusion. For all the downvoters Price fixing by algorithm is still price fixing: https://www.ftc.gov/business-guidance/blog/2024/03/price-fixing-algorithm-still-price-fixing https://www.ftc.gov/business-guidance/blog/2024/03/price-fix...
onlyrealcuzzo 2y ago
> I think this probably has decreased house prices to some extent, but people are really insanely reluctant to sell a house for less than they bought it for If a mortgage is recourse, and your home price has fallen enough - yeah, you have a pretty big reason not to sell. Especially if your alternative is to pay more monthly for a worse rental (often the case).

dustincoates 2y ago

A similar thing has happened in France, where the government has restricted the rental of less energy efficient dwellings[0]. This is generally a good thing for the environment, but it has already had an effect on rental prices as those apartments are now taken off the market. The exact impact is a little hard to work out, because, at least in Paris, it's also coincided with apartment owners wanting to hold on to empty apartments to rent them for the Olympics rather than to locals. 0: https://www.connexionfrance.com/practical/timetable-for-new-energy-linked-restrictions-for-homes-in-france/199184#:~:text=From%20January%201%2C%202025%20rental,to%20250%20kWh%20per%20m%C2%B2 https://www.connexionfrance.com/practical/timetable-for-new-....

Rinzler89 2y ago
>apartment owners wanting to hold on to empty apartments to rent them for the Olympics rather than to locals. Sounds like something that can be fixed with laws. Edit: would you mind explaining your downvotes with arguments please? thanks.
- throwaway1105q 2y ago
  We're talking about France, fix the law too much and heads will roll, or at least cars burn.
  - Rinzler89 2y ago
    Why would people violently protest against taxing empty real-estate that's not occupied by locals? I'm not French but IMHO, Airbnb style short term renting for tourst purposes should come with hefty taxes because housing should always prioritize the locals who live, work, have families and pay taxes there, not wealthy foreigners on vacation.
    - throwaway1105q 2y ago
      Because it's the locals who own it, even if they live elsewhere in the city. It's probably their pension income. Flats are usually owned personally by small scale owners in Europe, it's not like the huge funds and corporations in US. They are not poor but also not rich, it's work even if it's rented long term, and a lot of work if short term.
      - Rinzler89 2y ago
        >It's probably their pension income Sucks for them I guess. Maybe they should have diversified and invested in stocks or bonds instead of going all-in in housing-for-rent "investment" and complaining it doesn't turn up to be a huge profit making scheme like they expected, and expect the government to cover their losses. Someone's housing shouldn't be someone else's for-profit side-hustle gamble. It's why housing is such a mess in the first place. You can't have housing be affordable AND provide hefty profit returns in private pockets at the same time. Those will always be in contradiction at odds with each other in capitalism. Honestly, I expected better from the socialist French, that they would have solved affordable housing for the masses.
        throwaway1105q 2y ago
        Your mistake is assuming France is socialist just because of its relatively generous welfare. It's actually neoliberal capitalism with strong preference for large corporations. And that's why this would lead to a protest or at least voting preference shift - it'd be taking one of the last remaining assets in the hands of the middle class.
- dustincoates 2y ago
  I'm not sure it's something the government wants to or can fix. Many apartments that are being rented are those that house people otherwise, Paris being very well known for emptying out in July/August. For those that are being held back to rent, it can probably be hard to know what's the truth, "we didn't find a tenant" versus "we didn't want to find a tenant." Also, I think there's also a benefit to the government, as they want to have this empty short-term housing stock available for tourists coming in. A lot of money is being invested in the games, it's important to get the tourism money to make it profitable.
physicsguy 2y ago
That's also happened in the UK at the same time, but it's actually very difficult to bring many of the UK's pre-1930s households up to the minimum level without gutting the property and having it vacant for a period.

rahimnathwani 2y ago

Something about the tax position of letting mortgaged property. EDIT: I had misremembered. Landlords can still get a tax deduction for mortgage interest, but only at the 20% rate, not at their marginal tax rate. For most landlords with mortgages, this probably halves the tax credit. In the UK, if a private landlord receives £1000 in rent, and pays £800 in mortgage interest, they pay tax on the whole £1000, not just on the money they made. There are reasonable arguments on both sides: A) Why should a landlord be able to deduct mortgage interest from their income, for tax purposes, when owner-occupiers cannot? B) Why should a landlord be unable to deduct business expenses from revenue before calculating taxable profit, when all other businesses can?

thraxil 2y ago
Wouldn't a reasonable resolution to the conflict between A and B be to instead allow owner-occupiers to deduct mortgage interest from their income for tax purposes?
- rahimnathwani 2y ago
  That just shifts the perceived inequity to: C) Why can homeowners deduct mortgage interest costs, whilst renters cannot deduct rent costs?
lkdfjlkdfjlg 2y ago
> Why should a landlord be unable to deduct business expenses from revenue before calculating taxable profit, when all other businesses can? I think you nailed it. This is effectively the government saying "renting is not a business". Think about it. The ability to "deduct expenses" is one of the characteristics of businesses. Individuals also can't deduct rent, food etc from their taxes.
- rahimnathwani 2y ago
  This is effectively the government saying "renting is not a business". Yes, but only if you're an individual landlord. If you register a company and buy the property through that, the normal rules apply and all interest expense is deductible. Of course, the mortgage might be harder to get or more expensive, as it's no longer secured on an individual's assets and future income.

pydry 2y ago

Rents have been climbing for the same steady rate they have for years now. Shrinking supply meets increasing demand. Nothing about that has changed recently. The recent reforms did swap out some landlords for homeowners. It didnt undo the war on affordable housing it just prevented landlords from profiting as much from it. Which is a good thing, even if some media outlets owned by landlords do like to pretend that euthanizing the buy to let landlord is bad renters.

downrightmike 2y ago

Its not stability, it is collusion. For all the downvoters Price fixing by algorithm is still price fixing: https://www.ftc.gov/business-guidance/blog/2024/03/price-fixing-algorithm-still-price-fixing https://www.ftc.gov/business-guidance/blog/2024/03/price-fix...

onlyrealcuzzo 2y ago

> I think this probably has decreased house prices to some extent, but people are really insanely reluctant to sell a house for less than they bought it for If a mortgage is recourse, and your home price has fallen enough - yeah, you have a pretty big reason not to sell. Especially if your alternative is to pay more monthly for a worse rental (often the case).