It’s not ‘greedy’ landlords who are responsible for the high rental costs

May I put forward the view that there is a very simple reason for these current high rentals. All landlords buy properties for rental as an investment, and as anyone with money to invest is looking for a reasonable financial return, so too are they. The latest average house price in Guernsey

that I could find online was £587,673 in August, and as a leading financial institution in Guernsey is still

offering a 5% yield on its deposits, it is not unreasonable to expect a similar yield from property investment. If this rate of 5% was applied to the latest average house price it would indicate an average annual required return of £29,383, or £2,448 per month. I would suggest that many monthly rentals are considerably less than this and of course out of all rental receipts the landlords will often have to pay regular maintenance, rates and insurance costs, plus in some cases service charges, thus reducing the final rental yield to well below 5%.

May I suggest therefore that it is not greedy landlords who are responsible for high rental costs, but simply the high cost of housing in Guernsey, and until this changes rental costs will remain stubbornly high.

Any attempt at artificial control of rentals through disincentives would simply result in landlords selling their properties which would further increase demand for the remaining properties, significantly pushing up rentals with all the resultant consequences that this would bring.

Conversely any incentives for landlords to invest may increase the number of properties available for rent, thus reducing to some extent rental costs. This is simple basic economics, nothing else.

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