Great piece Michael, and yes, felt there was a lot missing from the IPOA report. There is significant non compliance in the sector and a lack of real data about who is renting and why. There's also a dearth of long term studies of tenants, especially long term tenants. I did study Systems Thinking & practice with the OU, so delighted to hear whole system analysis is being doing by someone.

I think a missing point in the paper was the tax treatment on small investor sales, which in context of large sales prior to 2006 is extremely favourable. If anything, one of the issues at the moment is that. It would be nice to get more in depth study of landlord who bought prior to 2006 in particular. The point on investment arrears is a critical one. It's another area for deep study perhaps.

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Many small landlords are not 'utility maximising' as per the neoclassical model. They may sell because they regard the system or its outcomes as unfair, even if it means cutting off their nose to spite their face. I write from some personal knowledge.

In some cases tenants have benefited from low rents that were voluntarily introduced or maintained by the landlord following the GR that then became the base from which rent increases were limited to 2% per year. It is not unusual for properties held by small investors to be let 20-50% under 'market' (even recognising that the 'market' price is skewed by the predominance of new lettings). Some such tenants have improved their economic situation over the years, potentially enjoying more income than their landlord. Under the current system, such tenants are strongly incentivised not to relinquish their tenancy (even if they come to own a separate property) to facilitate a family with greater need to benefit from the capped tenancy. On the other hand, were the landlord to sell the property, a genuinely needy first time buyer could benefit. This is a strong motivation for many to sell that is not included in your economic universe.

I predict that the decreasing value of residential investments (due to higher interest rates, inflation, and improved return from government bonds) will shortly accelerate their sale, not by small landlords, instead by large 'professional' investors ie REITs who are indeed 'utility maximisers'. Now that will be interesting !

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