Brad Sallows
Army.ca Legend
- Reaction score
- 8,001
- Points
- 1,040
A homeowner has to pay the costs of financing, upkeep, insurance, and taxes/fees.
A renter has to pay the costs of financing, upkeep, insurance, taxes/fees, and the owner's "profit".
A couple of things that keep rentals affordable are firstly that rental properties tend to be smaller than full-sized homes on lots, and secondly that many landlords have a capital stock that allows them to pay more up front and thus have lower financing costs. The latter is a benefit that is at least partly passed on to renters.
"Profit" isn't just money in the owner's pocket. There are at least two risk premiums profits have to cover. One is mitigation of the costs of bad tenants. Another is investment risk. It probably doesn't occur to most renters, but part of what they are renting is the owner's capital stock - without risk to themselves.
Potential landlords with only one premise to let are highly vulnerable to bad tenants and to costs imposed in jurisdictions that tend to favour tenants' interests. Consequently they are reluctant to rent in the first place.
A renter has to pay the costs of financing, upkeep, insurance, taxes/fees, and the owner's "profit".
A couple of things that keep rentals affordable are firstly that rental properties tend to be smaller than full-sized homes on lots, and secondly that many landlords have a capital stock that allows them to pay more up front and thus have lower financing costs. The latter is a benefit that is at least partly passed on to renters.
"Profit" isn't just money in the owner's pocket. There are at least two risk premiums profits have to cover. One is mitigation of the costs of bad tenants. Another is investment risk. It probably doesn't occur to most renters, but part of what they are renting is the owner's capital stock - without risk to themselves.
Potential landlords with only one premise to let are highly vulnerable to bad tenants and to costs imposed in jurisdictions that tend to favour tenants' interests. Consequently they are reluctant to rent in the first place.