0:10 AM, 7th July 2023, About 8 months ago 15
Knowing that those who hate landlords will be spitting when they read this, I must explain why sharing the capital gains made from a rental property investment is nonsense.
This is the argument made in a recent article in The Big Issue, which claims that renters should get a share of the profits from a rented house sale.
The story obviously hit a nerve with Property118 readers – and the comments make for great reading, so I know I’m not alone in my thoughts.
We all need to understand that renting a property is a common choice for many people in the UK, especially in urban areas where house prices are high.
Some renters may feel that they are paying their landlord’s mortgage and that they deserve a share of the equity profits when the property is sold.
However, this argument is flawed and ignores the realities of the rental market and the risks that landlords face.
Let me spell out why landlords should not share equity profits with renters.
Or, as a landlord friend of mine says: ‘You paid your money and made your choice’.
I appreciate that landlords don’t get positive media because most non-landlords think we are getting money for old rope without appreciating the costs and time involved in running a rental property.
It isn’t easy – just ask the countless numbers who have tried it and bailed out.
Just ask the landlords with flats that have cladding on and have seen the value of their investment plummet.
Just ask the landlords who spend thousands of pounds and months or even YEARS trying to evict a non-paying tenant.
Does the non-payer deserve a slice of the profit made on an investment? Or the renter who trashed their home and caused thousands of pounds of damage?
Most tenants are great, respectful people but landlords deal with all sorts.
The capital gains made by a landlord will just about cover the cost of the stress, sleepless nights, money spent on pointless licensing schemes and refurbishing time and time again.
It might cover the times that the landlord and his/her family went without because they aren’t rolling in cash.
Let’s face it, landlords should not share equity profits with renters because renting is not the same as buying, equity profits are not guaranteed and sharing them would discourage investment and reduce supply.
Renters pay for a service, not an asset, and they should not expect to get something for nothing. (Can you hear the keyboard warriors warming up?).
Landlords provide a valuable service to society by offering housing options to people who cannot or do not want to buy their own homes.
They deserve to keep their equity profits as a reward for their investment and risk. If you want a share of any capital gains, put in the effort, save up and invest – and deal with people who don’t respect you and want to take what you have worked hard for.
Let the haters hate.
Until next time,
The Landlord Crusader
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