alt Hacker NewsAdditionally, landlords don't benefit from the higher prices (ie. market rate rent) either, since that also pushes house prices up. A landlord entering the market has a higher capital cost that absorbs the higher rental return, such that typically rental yield remains about the same (at slightly higher that the cost of capital that covers their increased risk compared to a more stable investment).
Those who benefit are those who own housing at the time of market rate increases. That's just regular investment return and the risk/reward can be directly compared to any other form of investment. Current owner occupiers and current landlords benefit at the time of every increase (even if their capital gains are not immediately realised). And then every household, whether they are owner occupiers or tenants, have to pay in the form of higher capital expense. Landlords simply pass the higher rent through to pay for their higher capital expenses.
Replies
> Additionally, landlords don't benefit from the higher prices (ie. market rate rent) either, since that also pushes house prices up.
You’re forgetting the large contingent of “landlords” sitting on and renting out 1-5 residential properties,
but doing absolutely nothing to them, and buying no new properties, for the remainder of their lifetime,
besides emergency repairs that the tenant demands.
> Additionally, landlords don't benefit from the higher prices (ie. market rate rent) either, since that also pushes house prices up.
I like this thinking. If you buy a house on the cheap and rent spikes and your profit increases dramatically, you’re not benefiting because somebody will kick in your front door and force you to buy a crazy expensive house.
Besides what you said, it is also in landlords' interest to maintain (but admittedly with as little cost/involvement as possible) the perception that the real estate goods they're renting are (quality wise) reasonable options for their prospective clients. That means that they (may go to lengths to) fend off troublesome tenants and thus contribute to the overall quality of life for the community in the neighborhood.