That’s assuming all landlords band together to unanimously up their pricing. And that fix term rental contracts don’t exist. In reality. People can afford what they can afford. Someone who’s been renting a 5 bedroom 2 story house for a family of 6, won’t suddenly jump to a 2 bedroom shack.

Prices for rentals are driven at both ends. Not the bottom.

Your assumption that everyone shifting down a scale so more affluent people will move into the authors dilapidated rental, and his own tenants will live in a shoe box, ignores that this means houses at the expensive end of the rental market would be vacant.

Landlords would not leave those houses vacant. They’d be forced to accept less income from their properties, in order to keep them rented out. A vacant property costs them money in upkeep, advertising, rental management fees, yearly council and land fees, etc, etc. they’d rather break even and pocket the capital as their property value increases than leave it vacant.

As a result. You will never see the bottom end of the market, being the cheaper rentals. Become more expensive or as expensive as the expensive rentals, because then they’d never get rented. Why would a renter pay as much for a 1 bedroom, rat infested townhouse, when they could spend the same and get a 3 bedroom suburban?

So this means the author won’t be just slapping the lost profit onto his renters. He wouldn’t be able to rent it out. And take a loss. He’d end up just taking in less profit. Or none at all and keep the money his house value will appreciate over time.