I was delighted to read from the BBC that Labour’s Lisa Nandy has rejected the idea of rent controls.
Although they seem to be helpful for tenants in the short term, actually long-term, rent controls can be a disaster for tenants.
Research has shown that over the long term, landlords either increase rents as much as they can (more than they would do if there was no rent control) or the policy discourages them from renting property at all, and they sell up.
Which could mean that property no longer being available to low-income families.
Failed rent control schemes in the past
So long term, the policy results in fewer properties available for tenants to rent – which in itself eventually results in higher rents for those properties which are available.
Examples include
- Berlin which introduced a five-year rent cap (discussed here) but which was held unlawful by the courts in 2021
- Scotland, where properties for tenants are at a premium, and
- England before January 1989, when all rented properties were subject to the ‘fair rent’ rules. Over time this had resulted in a reduction of rented properties from about 80% of all households in 1900 to about 8% in the 1980’s.
Legal challenges
Rent controls can also be a problem for the government. For example, in Malta, where there are very strict rent laws which prevent landlords from charging a market rent, landlords are challenging these in the Europen Court of Human Rights as they breach the landlord’s property rights.
The Maltese state has been ordered to pay almost 140,000 Euros in three separate cases. Not something a Labour government would want to pay, as I am sure lawyer Keir Starmer would agree.
Incidentally, anyone who has been to Malta will probably have noticed how many of the properties look like they are in poor repair. This is doubtless why.
The solution
In my view, the best way to bring down prices is to have more properties available to rent. Ideally, this should be social housing, as too many people who should be housed in the social housing sector are housed in the private sector.
On coming into government (if they come into government), Labour should embark on a massive social housebuilding program. Ideally, using modular housing built to strict environmental standards. Let’s hope that they feel able to do this.
Incidentally, the NRLA agree – CEO Ben Beadle saying:
We agree with Labour that rent controls would do nothing to address the rental supply crisis that tenants across the country now face.
What renters need is a proper plan to boost the supply of homes for private rent alongside all other tenures. Housing benefit rates should also be unfrozen without delay to support vulnerable tenants who are struggling to access the rental market.
What do YOU think?