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The Inflation Equation: Why Labour Could Actually Be Good For Landlords

Article Posted - 11th December 2019


Could Jeremy Corbyn be courting the landlord vote?

I know, it's a preposterous thought. Laughable really, but bear with me for a moment.

We all know that Mr Corbyn has been a vocal critic of private landlords for a great many years. But perhaps we've overlooked an ally hiding in plain sight.

The Labour manifesto pledges to introduce a new “Renters' charter” guaranteeing 3 rights:

  1. The right to a decent home
  2. The right to a secure home
  3. The right to an affordable home

Point one is clearly a red herring since renters are already entitled to a decent home—and Mr Corbyn surely knows it. Suggesting they don't is simply a political device to drum up support. In an election campaign, this is to be expected. No big deal. Perhaps it could even lead to more enforcement, which would be no bad thing.

Point two is openly damaging to landlords as it removes a safety net of Section 21, but frankly they're only proposing to follow the same path as the Tories. Bad, but everything is relative to the alternative.

It is the third point that suggests to me that Mr Corbyn could well be a comrade-in-arms with the landlord cause—albeit unintentionally.

“Affordable” is a euphemism for “rent control”, and this is scary for landlords, right? Well it certainly sounds like a nasty idea—after all, very few businesses readily hand over price setting powers to the state.

However, in this case, Labour want to cap rent increases at inflation. That's right—inflation: the measure that has outpaced rent increases routinely for years.

Sound crazy? Yes, but take a look at the chart at the top of the article that compares the average rental income with different official measures of inflation.

Ignoring the fact that many landlords simply never increase rents mid-tenancy, landlords would be better off to the tune of more than 10 per cent, even when using the most conservative CPI figure.

So perhaps, on reflection, Mr Corbyn wouldn't be so bad for landlords as many fear.

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