A new research paper has been published to help brief MPs on the arguments for and against rent controls.
Its surprising ending suggests that agents themselves could hold the key to their re-introduction.
Private rented housing: the rent control debate has been placed in the House of Commons library.
Rent controls used to exist in England until 1989. Until then, tenancies were generally covered by the Rent Act 1977, with ‘fair’ or ‘registered’ rents set by independent rent officers.
Since deregulation, most new private lettings have been assured or assured shorthold tenancies, where landlords can charge market rents.
The new paper discusses the subject of rent controls returning to the political agenda. These include Shelter’s call for a ‘stable rental contract’ of five years during which annual rent increases would be index linked.
The Labour Party’s 2017 manifesto said: “Labour will make new three-year tenancies the norm, with an inflation cap on rent rises.”
Generation Rent wants to go further, calling for monthly rents to be capped to half of the property’s annual Council Tax band.
The briefing paper notes that it is not surprising that there has been substantial opposition by landlords and membership bodies, including that market intervention would result in landlords withdrawing.
A chief argument for rent caps is affordability: in London, tenants of a median rent two-bed property can expect to spend half their earnings on rent. Not surprisingly, the Mayor of London is a firm advocate of limiting “unacceptable rent increases”.
Another argument is the cost to the public purse where private tenants are on housing benefit, receiving Local Housing Allowance – a flat rate payment which is capped.
The paper also discusses rent controls in other countries, including opposition from the likes of Assar Lindbeck, a professor in Stockholm, who said: “In many cases rent control appears to be the most efficient technique presently known to destroy a city – except for bombing.”
The 37-page paper is impartial, densely researched – and ends on a somewhat surprising note.
In Paris, rent controls have been part of new regulations since 2014, whereby a ‘rent observatory’ provides the evidence for deciding whether to allow rent rises in re-let properties.
Apparently, there have been reports of rent increases; but there are also reports of “growing resistance by estate agents” to provide the evidence: “Without the statistics provided by the agents, it is difficult to see how the reference rents can be provided.”
https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06760
It seems to me all of these organisation do not want private investment in the housing market. They all spout off but they do not put any of their money conned off of the public into providing housing, and only attack those who have invested. It seems they wish to go back to the two tenure system where you either bought your home or rented from the Council. In those days there was virtually no mobility of labour as you could not easily move to other parts of the country to work as you would not have any potential to rent a home. The perfect storm for housing is being generated by those who claim to be helping tenants.
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Based on the the fact that agents held the key for the fee ban, yes, agents hold the key for rent controls.
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Toronto, which had a strong rent control system abolished it from November 2018 (for all new tenancies). Why? It doesn’t work.
3 year tenancies with market rate rents at the beginning, and controlled increases during the tenancy, with the tenant having to move out at the end – an automatic right to evict without having to go to court – so being able to instruct a Bailiff simply by showing them an expired 3 year AST, would be acceptable.
If the tenant chooses to stay there, a new contract will be entered into and the clock will start running again. Anything else will cause chaos.
Generation Rent is living in cloud cuckoo land. If they can get that through, I should sell my house, and hustle to rent in Westminster as I ought then (with all the other millions looking to rent what will be non-existent property there) be able to rent a 4 bed for c. £600 pcm. ROFL.
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There are rent controls in place; it’s called a competitive market. Less stock = less competition, more stock = more competition. Please stop pushing BTL investors out of the market.
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The month’s rent should be half the annual council tax rate?!?! Where I am that would put rents back where they were 22 years ago and be slightly less than the local council house rate! Also, since HAs and councils have raised their rents by a massive degree over the PRS, would they also be included in this nonsense?
It’s such a tragic idea it’s comic… you watch it get adopted!!
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