Why rent controls really aren’t the answer to the housing crisis


Speaking at the Labour Party Conference in September, Opposition Leader Jeremy Corbyn announced his plan to explore the implementation of rent controls on private landlords, should the party to come into power.

If plans were to follow existing models, it would be likely the amount landlords can charge tenants would be capped. Corbyn said he would follow similar models already in place in Ontario, Berlin and New York, where property owners are banned from raising rents by more than 10% of the local average.

The Association of Residential Landlords (ARLA) and Shelter were both quick to respond, stating they feel rent controls are not the answer to the UK’s difficult housing situation. ARLA in particular said; ’Whenever rent controls are introduced, the quantity of available housing reduces dramatically and the quality of private rented properties also deteriorates.’

The Residential Landlord’s Association (RLA) Policy Director, David Smith, meanwhile highlighted one of the benefits of the current private sector activity is the provision of more high-quality housing. “The private rented sector has invested in providing homes for the population, putting more homes into use than any other landlord type. Instead of attacking landlords, the private rented sector should be seen as part of the solution to the housing crisis.”

What would be the impact of rent controls on landlords?

The biggest concern for landlords is that rent controls could mean our profit margins are squeezed, especially if our running costs or mortgage interest rates increase. In turn, this could have notable effects on the buy-to-let market.

Firstly, rent controls could deter investment in buy-to-let properties which is sorely needed, thereby reducing supply and increasing demand, potentially making it even more difficult for tenants to find a property.

Secondly, it could mean there are fewer funds available to improve the quality of portfolios, meaning some properties may no longer meet minimum standards.

So, is there an answer?

If we really are serious about making housing more affordable, especially in London and the South East, we should not hark back to the failed policies of the past but instead make it easier to build, particularly in areas where price rises are telling us there is a huge demand. Maybe it’s time to look at planning restraints so we can build both up and out.

In conclusion

Rent control is often marketed by politicians as a way to help those with lower incomes, painting the landlord as a heartless individual who only cares about cash, declaring rent control as a way to stop this. Some, especially the younger voter who has not experienced the rent controls of the past, can idealise this scenario. When not critically analysed, rent control sounds utopian as one of the tenants’ largest expenses has now been limited. But in reality, the effects would be tragic on both the landlord and tenant.

Crystal joined Pace in 2007 and was appointed to her current role of Managing Director in 2010, heading up the company founded by her father in 1994.

She is responsible for the daily operations of the business, whilst also ensuring the company is financially sound, has strategic direction and is planning for future growth.

Crystal takes a thoughtful and considered approach to all that she does, transferring her determination to deliver implicit care, attention and professionalism to every member of her team.

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