Comment: Rent controls and politics

The private rented sector is the focus of conflicting political aims, which are causing confusion and very possibly, rent controls, says Nigel Lewis.

Rent Control protest image

Attempts by several city mayors, governments and campaign groups to bring in rent controls across the UK have been coming in thick and fast over the past few months. Scotland now has one – albeit a lighter ‘cap’ rather than a ‘freeze’ as originally proposed – but this has emboldened campaigners in Wales and England to call for similar measures for their private rented sectors. This includes London’s mayor Sadiq Khan, Bristol City Council, the Welsh and English Labour parties, and of course organisations such as Shelter and Generation Rent.

The PRS conundrums faced by ministers like Gove and Buchan seem unsurmountable…”

In his 2019 election manifesto, Labour leader Keir Starmer promised to introduce rent controls for private tenants and vowed to put “bad landlords out of business”, although his Welsh Labour counterparts have backpedalled from this. In September last year the Welsh Minister for Rural Affairs, Lesley Griffiths MS, said of rent controls: “One of the things I think that could happen is that you could see landlords exiting the market in large numbers, and that, therefore, would reduce the supply of property, which could lead to significantly increased homelessness.

“There are other potential unintended consequences as well. If you look at international evidence, you will see that rent control measures can create a target rather than a cap.”

Almost a joke

Although rent controls do not pose an existential threat to letting agents and, until recently, were considered almost a joke, the cost of living crisis has persuaded parties from across the political spectrum that limiting rent rises could be a good idea. This includes the Government in England, which has shifted position recently and, although Ministers do not support them directly, its recent White Paper, ‘A Fairer Private Rented Sector’ and the likely Renters’ Reform Act to follow later this year, will make it clear that rent increases must be limited to once a year, that landlords will have to give two months’ notice of any rises and that it will also eradicate ‘rent review’ clauses in tenancy contracts.

In Scotland, its recently implemented rent controls have merely created more paperwork for agents, but more importantly they are already holding back investment by landlords in their properties and persuading more to leave the sector which are already key problems for the private rented sector and its property providers across the UK. Housing minister Felicity Buchan admitted as such recently at a speech at a regional landlord conference, telling delegates that rent controls would lead to “disinvestment in the sector, which is not good for anyone”.

But let us not belittle the huge challenges facing tenants seeking to live in Britain’s cities, where rents have been rising sharply since the end of Covid. Tenant demand for homes is at an all-time high as many younger people defer or end their dream of getting on the property ladder and these factors, along with landlords who face higher costs, are pushing up rents.

Goodlord’s Rental Index saw rents on new tenancies in September last year hit £1,249 pcm, up 13% on the same period in 2021. “Rent increases restrict mobility and supply, with tenants frightened to move house for fear of facing even higher rents in a new home,” stated an open letter, from Goodlord, to housing secretary Michael Gove. It went on, “A recent survey of tenants confirms that rising levels of rent are tenants’ biggest single concern, cited by 86% of respondents.”

Political hot potato

The huge PRS conundrums faced by ministers like Gove and Buchan seem unsurmountable and make we wonder why anyone would want to work at the Department of Levelling Up, Housing and Communities on policy! On the one hand high rents are rapidly becoming a political hot potato as millions of tenants’ purse strings are being tightened and yet, politically, the Conservatives are extremely reluctant to interfere in the private rented sector because ‘the market knows best’. But this view is not universal in the party – last year Conservative MP Natalie Elphicke launched a campaign via the Renters Reform Coalition calling for rent controls – so grassroots MPs like her, in economically weak towns, see votes in restricting rent rises.

So as a long as rising living costs continue to bite millions of British renters, expect to see calls for rent controls getting louder.

One Comment

  1. In this area rents were pretty much static for 10 years, why well interest rates tumbled and landlords in the main were comfortable with their return. We now have the fear of mortgages perhaps doubling when fixed terms come to an end many will already have done so and landlords need to cover costs or they go out of business.
    The puzzle is not that rents along with the cost of everything else are rising but that the so called elite sitting in Westminster and the warriors at Shelter do not understand basic economics. Being a landlord is a business and without them we really will have a crisis because there is no social housing available. Not everyone finds it practical to buy never mind the cost without rental properties we have a static workforce.
    But we as an industry need to shout lounder about the millions of people renting from good sound landlords in good sound properties and perhaps we can silence those who think we are all robber barons or worse.

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