Eli5: Why are so many office blocks and retail shops in UK that are ” to let” remain empty for months, rather than to reduce rent ? Why do landlords do this?
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The rental return is, for your bank, the real value of the asset. If I go to the bank and ask to borrow money against a property returning $100,000 a year in rent, they will calculate my ability to make payments, pay for maintenance , taxes, etc, along with interest rate hikes, and lend me, say, $1,000,000. If I were to drop the rent to $80,000, by their formulas, I can now only afford an $800,000 loan, and they will demand I stump up $200,000 immediately
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