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Op-Ed: ‘Rich renters’ — The new plague making it harder to rent

When was the last time you heard anyone say, “We’d like to make a lot less money this year”?

Even New Yorkers lucky enough to live in rent-stabilized apartments -- approximately one million units and two million tenants, according to city data -- are not immune to the growing housing crisis in their city. — © AFP
Even New Yorkers lucky enough to live in rent-stabilized apartments -- approximately one million units and two million tenants, according to city data -- are not immune to the growing housing crisis in their city. — © AFP

If you’re rich, renting is easy, right? Well, in theory. You’re spending a lot of money, but less than you would if you bought a house, right? You don’t mind being an easy target in an overheated market, either. Cute.

We’re not talking about the super-rich upper-bracket penthouse dwellers. These are middling to rich people who’ve moved into the mainstream rental market. They’re slowly but literally pushing everyone else out onto the street.

Rich renters are taking up a surprising amount of space in the global rental market. They used to be very much a minority. Now they’re pushing everyone else out of the market and prices are rising simply because they’re in the market.

Add to this the simple logic that people will usually pay a lot for their social pretensions. They like to live the image. There you have the basis of a market very like a drift net scouring the ocean floor.

A few points here:

Paying top dollar does NOT mean you’re getting a good deal by definition.

Leases and fees can be complex. You want a law degree to go with that condo? Maybe not.

Landlords, corporations, and their agents are not charities. You can get gouged as easily and as often as someone earning 5% of your salary.

Why exactly are you paying the equivalent of someone’s annual gross wage, and for what? If you answered, “Because I’m rich and I need to impress myself”, you’re well on the way to being a rich naïve broke person. Fools and their money are usually parted as soon as possible on that basis.

Having said that – It makes sense in terms of commercial realities for landlords. Who would you rather rent to, a rich person or someone who’s just scraping by? When was the last time you heard anyone say, “We’d like to make a lot less money this year”?

As a landlord, if you also don’t mind excluding yourself from the rather turgid mainstream rental market, it’s a good move, in theory. That’s not to say that someone pretending to be a rich renter won’t send you broke with non-payments, but hey, you need the excitement, don’t you?

Belong examined Census Bureau data to see which metros have renters who are putting the largest share of their income toward rent.
Belong examined Census Bureau data to see which metros have renters who are putting the largest share of their income toward rent. – Photo Illustration by Stacker // Canva

Of course, the property market image of itself is rarely related or even connected to the reality. This is a very greedy market. There’s a gibbering lunatic behind every spreadsheet in this market. Renters can often be on the wrong end of that endearing little phenomenon.

For instance – You’ll be hit for minor damage to anything and everything. You have to guess about the quality of the premises, regardless of looks. The floor may be held up more by innuendo than by support beams. Maintenance is likely to be an expensive issue. You’ll be surrounded by other rich people, with all the unmitigated bliss that entails. Want your bond back? Good luck. These are just the basics of any rental market, translated into rich-speak.  

There is one aspect of rich renting that makes far more sense. It’s about staying out of the highly combustible property market. You could spend a not-very-high $240,000 a year on rent, for example. That’s the equivalent of a small price move in some of the upper echelons of the US property market.

The endless fluff about rising property prices isn’t entirely an illusion, but it’s truly expensive. Getting the price you want when you buy, or sell, isn’t something you can take for granted. Buying and selling in an overheated market isn’t too much fun. Renting is a less dangerous and far less expensive option.

The property markets have been going berserk for a very long time. Most of humanity now finds buying a house unaffordable. That can’t last, and it won’t. A lot of people are expecting a crash. Why buy a house for top dollar if you can wait for a much better deal?

You can afford it. You can also afford to haggle. Rich renters are in a much safer market position as buyers. They’re also safer as renters because they’re far less likely to be kicked out. They’re cash cows that can afford to be cash cows.

Meanwhile, inevitably, the rich renters have also scrambled the entire rental market for everyone else. They can outbid everyone else. Nobody else can dictate to this market, but they’re different.

They’re also renting from the rich, and the corporate sector, those saints who see them as ready-made revenue. The market caters for them, unlike any other renters.

The trouble with this idyllic scenario is that the rental market is now fully geared to achieving the worst possible social outcomes. Rich renters are helping keep rents high and indirectly property prices as well.

Mass homelessness isn’t a theory. It’s an obscene fact, worldwide. The sheer amount of money being gouged out of the economy is also destroying spending options. Costs of living at this level destroy savings and financial options.  

Just one more thing – As a rich renter you may be sitting pretty relative to the poor, but that’s about all. You’ve signed up as a renter who’ll pay big money. Feeling lucky?

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Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.

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Editor-at-Large based in Sydney, Australia.

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