There must be rent cuts!

I’d now suggest 20%, across the board statutory rent reductions would be in order, as a minimum.

And I’d also suggest rent roll up with liability due over a period eight times longer than the length of the period over which deferral takes place would also be appropriate.

I would match this with a right to claim a mortgage payment holiday to match.

Landlords could survive this. Their tenants cannot.

And I stress: these are outline suggestions for discussion, not detailed policy proposals. But what they make clear is that radical thinking is required now or the rental sector is itself going to collapse – a risk that they should be taking as seriously as I do by making this suggestion.

So, OK, let’s be radical – this is, after all, being thrown out there for discussion. If only we were allowed to discuss it there, eh?

So, agreed, some to many people cannot afford the rent they’re being asked to pay. Some can. There needs to be some sort of system or sorting though who should be paying rent, who should be losing out from it not being paid and so on.

Why not let landlords and tenants sort it out among themselves? That’s what is happening in commercial rents after all. There are those who really cannot pay and so are not. There are those trying it on. There are landlords being supportive and helpful, those not. They will all reach some agreement at some point.

Why not leave them be to do so? You know, let the market take the strain here? After all, other than an insistence on knowing better than everyone else what evidence is there that any other solution will work better?

21 thoughts on “There must be rent cuts!”

  1. Surreptitious Evil

    Landlords could survive this.
    Their tenants cannot.

    I wonder if he has even bothered inventing any ‘evidence’ for these two assertions.

  2. Dennis: Oppressor, Warmonger, Capitalist and Consumer of Petroleum Products

    I wonder if he has even bothered inventing any ‘evidence’ for these two assertions.

    At this point in his descent into madness, why would you even consider it a possibility?

  3. ‘I’d now suggest 20%, across the board statutory rent reductions’

    What a nasty man. Why not 90%?

  4. Would be an idea to rescind upward only rent agreements, so that the market performs more effectively?

  5. So Much For Subtlety

    How about a 20% cut for fake academics at City Poly? Or has he achieved slightly more than that by himself?

  6. @ Dennis
    +1
    Most UK Property funds have shuttered because many people have long since recognised that any property company built on the basis of gearing up on cheap debt secured against rental income that considered secure will go bust.
    The history of residential property in the UK (I assume the US is different) was traumatised by Lloyd George’s rent freeze during WWI (1914-18) and the failure to cancel the freeze for nearly forty years (and then only partially) despite continued inflation. In the 1950s we had the “Rachman” scandal (Rachman was a poor immigrant who escaped from hungary while Sviet russia was crushing the rebellion and saw an opportunity to benefit from the poverty of landlords, some of whom actually received less in rents than they had to spend on maintenance). The newspapers made a lot of fuss about how Rachman overcharged his tenants, none about how the elderly law-abiding landlords were undercharging – e.g. at less than £1 a week for a two-bedroom flat which would currently sell for over £600,000

  7. @ Nautical Nick
    Well, that would require someone nearly as intelligent as a Border Collie to act.
    Sadly the letting agents have a cartel that is not controlled because nobody admits that it exists and it suits them. Landlords that want to offer sensible terms are boycotted or treated as last choice.

  8. Is Murphy now forced to sell his house, as a result of the latest divorce, and move into rented accommodation?

  9. @ Dennis
    Oh, sorry!
    Reading the small print on the website it comes out that the flats sold at >£0.5m, not >£0.6m.
    As you are an accountant you can notice the difference.
    The thing that sticks in my memory is that one flat, part of housing built for “artisans” – skilled workers such as carpenters, bricklayers, plumbers, thatchers … with non-employed wives looking after children had been sold, by the former tenants who had bought it from the landlord, to a *pair* of barristers.

  10. OT –but re the latest bit of butchery in Glasgow.

    I’ve just found this clip from the Last of the Mohicans which is sort of like our situation.

    The British column is marching away from the fort but the Huron attack.

    At first in small numbers–one man or two , stabbing and hacking. Only disturbing the area around the attack. The rest of the column can hear shouting and shrieking and a few musket shots but doesn’t know what is happening.

    Metaphor indeed.

    https://www.youtube.com/watch?v=kKWSZXHahjc

  11. “Why not let landlords and tenants sort it out among themselves? ”

    I suppose from Ritchie’s viewpoint (I still don’t know who he is) you just never know what they might come up with between themselves and it might be wrong. Why waste the time or risk the errors when Ritchie knows exactly what must be done and all they have to do is obey his dictates.

  12. You won’t appreciate this, Mr C, being a country cousin and all, but I think that is just one flat in Carlos Place.

    Anyway, why? I should think you could have a very passable suite at The Connaught, also in Carlos Place, for about half as much. Plus, Carlos Place is a thoroughfare akin to a dual carriageway, linking Berkeley Square and Grosvenor Square. Noisy and busy.

    It’s like with Belgrave Square. You’re a Rausing and you choose to live there? It’s a motorway wrapped around a garden.

  13. M’lud
    Sme idiots care about the prestige of their London flat when they only use it a week or so per year.

  14. “The history of residential property in the UK (I assume the US is different) was traumatised by Lloyd George’s rent freeze during WWI (1914-18) and the failure to cancel the freeze for nearly forty years”

    Rent controls in the U.S. date to the 1920s, so there may have been philosophical connection. Generally, there are no rent controls. Most everyone knows it’s a real bad idea. ‘Cept New York City. Over a million units are on rent control.

    Other trash:

    In the 1990s, the Clinton administration pushed selling houses to people instead of their renting – The American Dream. They demanded banks make horrible loans. This crashed in summer of 2008 as it became apparent Obama would be elected. It was the origin of the 8 year Obama malaise. And years of depressed bank values. And collapse of home values. Developers and construction workers out of business.

    Government implementing its will over the marketplace.

  15. Giving supermarkets a 20% rent reduction would be mental. They’re doing fine. As are various delivery firms.

    Many others are losing all their business.

    Even if it averages out as needing 20% doesn’t mean a single firm needs exactly that. After all, the average person has slightly less than one testicle. Averages should not be used for solutions.

  16. If you pick the right average, the average person has no balls.

    Which explains rather a lot these days.

  17. Yes, Chester. 20% is arbitrary. Why not 19% or 21%?

    Liberty: freedom from arbitrary or despotic government.

    He engages in tyranny, unless he can explain why exactly 20%.

  18. I manage three small commercial properties in a small town, two of these are managing in this Covid-19 era but one is struggling. Good tenants are hard to come by, I have reduced their rent by 50% for the duration. The market works fine if left alone

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