Rat and Mouse
Tue
26
Oct
Private rentals and the institutional sector

Over at Money Week... a good case for "the German model":

What insurance companies and pension funds want more than anything is long-term reasonable yielding assets (and residential property yields about 4.5% net at the moment) to match their liabilities. That's why they constantly overdose on bonds. But property provides much the same thing. Manage it well and you can get a perfectly good yield with the security of owning a very long-term asset. And, if you build specifically to let, the end price of houses is by the by: what matters is the rent.

Merryn Somerset Webb suggests a system of longer-term leases (of five to ten years), a kind of "rented ownership" in which the tenant can re-decorate and make the place a proper home, to make the sector more attractive to the institutional sector and to tenants, and provide a plentiful and well-managed alternative to home ownership.

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