The Greediest Landlord?

A recurring theme in Housing Minister David Burch's complaints about delivering affordable housing is "greedy landlords". On September 27th he held a press conference where he eviscerated "greedy" landlords who are "wreaking havoc in the housing market."

"You have people around here extorting money from other people for accommodation that's up for rent and they're able to get away with it because the demand is so great," Sen. Burch added.

Ignoring the Minister's inability to grasp basic supply and demand economics and market forces, I thought it only appropriate to provide a very illuminating example of arguably Bermuda's greediest landlord: Senator Burch's Government.

You'll recall that Government spent 1.5M to renovate Clifton as the "Official Premier's Residence", which Alex Scott lived in for a few short months.

Subsequently, on acceding to the Premiership, Dr. Brown opted not to move in to the mandatory "Official Residence" and we were told that Government would be renting this property out to provide some revenue and recoup the renovation cost (seems reasonable).

Clifton was put on the rental market in April, with a target rent of $25,000 - $35,000 / month, easily qualifying as among the absolute highest rents in Bermuda.

How has that worked out?

Six months later it remains empty, the rent slashed almost in half and seemingly continues to generate little interest.

That's a greedy landlord indeed.

So let's work this out:

By pitching the rent so high the property has been empty for 6 months, which, if we assume it could ultimately be rented for say $15,000 per month (questionable at best as it has no pool) has lost the greedy landlord $90,000 - half of the annual rent they could have got if they put a more realistic asking price on it.

Now who's greedy?

Sure, it's greedy, but it's also just the Government asking above market for an inferior property, and the market correcting it. Welcome to Bermuda and the real world of capitalism.

That's what goes on every day in Bermuda's rental market. People want to get the most rent/sale price for their properties...including the PLP Government.

Another egregious example of greed was the Premier strong-arming the Bermuda Housing Corporation into buying his Flatts house, after it was rejected several times, for over the appraised value. The non-Ministerial home sellers wouldn't have been able to swing that kind of a deal. Membership has its privileges.

So let's drop the greedy landlord nonsense can we. Bermuda is a free market and the Government is playing the game just like everyone else.

The alternative (Government fixing rental prices) is far worse.

(All of this is in addition to the question of why a $1.5M renovation of a centrally located historic 4 bedroom property with extensive grounds has produced a home that can't command the rent that one would expect.)

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