The Greedy Landlord: Finding the balance between profit and goodwill

In the world of property management, landlords often find themselves navigating a complex terrain where financial interests must be balanced with the welfare of tenants. Profit and goodwill form a delicate balance, one that a landlord, who's been managing rental properties for decades, is all too familiar. Recently, a chance encounter with a potential tenant seeking an affordable rental home in a conservation area shed light on the stark differences in perspective that can shape these relationships. TheBigRetort

A recent encounter with a militant flat seeker looking for a rental property revealed a strikingly different viewpoint to lettings than most landlords might expect. This particular tenant, firmly believed that landlords should reduce rents for tenants, not out of goodwill, but because it was the "right" thing to do. 

Her perspective was clear: greedy landlords should provide lower rents. Any financial sacrifices they might make were secondary. It did not form goodwill but was simply the guilt that arose from the bloated profits made by landlords. In short, it would be easier to get a camel through the eye of a needle than to get a greedy landlord through the pearly gates.  The uppermost landlord, He upstairs, would simply send the greedy down to the basement into the fires of hell. Such was her thinking.

No, she did not understand maths or finance and didn’t care. “You have made too much money out of property and so you should give some back.” 

She seemed quite angry and there was little Greedy Landlord could do to placate her. Had she listened she may have discovered that Greedy Landlord’s long property management journey had been marked by a commitment to providing quality housing while maintaining a successful rental business. 

Successful in that if it loses money then it is probably time to move on to greedier pastures. 

While profit is undoubtedly a significant aspect of this venture, it had never been the sole driving force for Greedy Landlord. 

Instead, Greedy Landlord had strived to find a harmonious balance between profit and goodwill, recognising the importance of both in keeping good tenants and in making good tenants great.

On the other hand...  the militant flat seeker's view was rooted in the naïve belief that landlords have already profited handsomely from their tenants and so should now give something back. 

Greedy Landlord, who had occasionally been in a position to offer reduced rents (when circumstances allowed), was taken aback by the militant flat seeker's response. He did have a flat coming on the market, who knows? 

He tried to argue that there were many factors governing why she was being forced out of a beautiful conservation area into the hinterlands of Zone 6 London or beyond. 

“What are they” She asked not really pausing for an answer. She simply assumed that any goodwill was trumped by profit and that lower rents were an entitlement rather than a gesture of goodwill.

Greedy Landlord's approach, not that uncommon among responsible property owners actually, had always emphasised the importance of maintaining a balanced perspective. Providing reduced rents, while commendable, is not always feasible for every landlord due to various factors such as market conditions, property expenses, and government policies. A balanced approach acknowledges the need for a rental business to remain financially viable while also valuing long-term tenant relationships. Failing that it’s sell then bank or invest elsewhere.

Militant Flat Seeker didn’t care. She was being driven out of the conservation area in which she had enjoyed reduced rents for years. 

But that was then and this is now. Now rents were on the up and up all over London and she blamed Greedy Landlord. If there was a property crash then he would have to sell up and she could at least then afford to rent at a lower rate. Or buy? 

But then when she bought would she not want house prices to increase?

She seemed annoyed and frustrated. "Of course!"  

She did not seem to be able to do the maths, as she previously admitted, on why taxation had increased rents. Like Mr Micawber, “My other piece of advice, Copperfield,’ said Mr. Micawber, ‘you know. Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”

The encounter with the militant flat seeker serves as a stark reminder of the varying priorities and values that shape the landlord-tenant relationship. While profit is a fundamental consideration for landlords, many, like Greedy Landlord, so named by the militant flat seeker, understand that goodwill and positive relationships with tenants also play an important role in the success of their rental business.

And a business it is after all. Even if it is not treated as such for tax purposes by HMRC. Not itself averse to taxing buy-to-let landlords differently, further ensuring rent increases.

Finding a balance between profit and goodwill is a challenge that responsible landlords strive to meet, recognising that the welfare of their tenants and the health of their rental business are intertwined. Why re-let every 6 months at a higher rent with subsequent voids and improvements if you can let for years, with some improvements along the way?

Greedy Landlord continues to embrace this approach, understanding that while profit is important, the goodwill that comes from providing quality housing and respectful relationships can be equally rewarding. In the ever-evolving landscape of property management, it's the delicate balance between these factors that ultimately defines the path of responsible landlords. If only Militant Flat Seeker realised. 

Instead, she cut the encounter short with a withering look: “Well, nice to meet you, bye!” she said. Even though it clearly wasn't.

Wait! Greedy Landlord nearly called out. After all he had a flat coming onto the market..?

Then he remembered Mr Micawber and paused, saying “Nice to meet you too!” Even though it wasn’t. 

He watched Militant Flat Seeker angrily cross the road before no doubt heading towards Zone 6 London and beyond. 

Meanwhile, Greedy Landlord had a flat, in the conservation area, Zone 2 London, soon to be empty, and at a reduced rent.

Editor's note.

 In response to concerns about the potential reinstatement of mortgage interest relief (MIR) for landlords, UK housing secretary Michael Gove has reiterated the government's stance. Reinstatement is not on the horizon. Gove emphasised that there are two key factors at play in the decision. Firstly, so the argument goes, many “older” landlords had previously benefited from MIR, and its reinstatement could be seen as favouring them. Secondly, Gove questioned the fairness of granting landlords a more favourable tax regime compared to individuals purchasing homes as their primary residences. This points to a broader issue in the taxation of property ownership: homeowners are often exempt from capital gains tax when selling their primary residences, while landlords are liable for both capital gains tax on property sales and income tax on their "total" rental earnings. Despite what they may be paying in mortgage interest. The differences in tax treatment between homeowners and landlords remain a subject of debate and consideration for housing and tax policies in the UK. And form the primary reason why rents are soaring. 

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