Profit for a purpose?

What makes a margin of over 70%? The answer will come as no surprise – renting out homes on the open market.

housing

Who are the sharp operators making all the money I hear you ask. You need to brace yourself. I got these figures in the accounts of RPs. They are no secret. And I don’t know what to think.

You could say it’s all good news. The homes will be great and service tip top. And best of all the profit does not go to a plutocrat. It gets spent on funding things like care that the government has cut right back on. What’s not to like? In fact if I was the CEO I’d be doing the same. So I can’t get on a high horse.

Anyway isn’t this just part of a wider trend? No one bats an eyelid if RPs make money on sales.

That’s because it’s a win-win. The RP pockets the loot while the buyer saves money on rent and gets the benefit from any price rises down the track.

So I can see the point of selling homes to folk that will live in them. I’m not keen on hawking homes to global investors. That just hikes up prices for everyone.

But is renting out homes on the open market a win-win? No. Here are some of the downsides:

  • Rent is dead money – every penny spent on it is a penny that cannot go towards a deposit
  • If you stay as a renter you never raise any equity to pass on to your kids – so bang goes mobility and
  • You will never have any money to pay for your care in old age. So we are back to square one.

Or are we? The RPs could be a bit more reasonable on the rents and you could think about rent to equity schemes.

As more and more folk live in the PRS they will have real clout at elections. I would act now or face the consequences.

More information about HQN’s upcoming ‘Opportunity knocks? Shaping a new private rented sector’ conferences is available here.

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