Comment: It’s time for rent regulation to address our housing crisis

We don't have to choose between tenants' security and housing sector growth

Social housing


News that the capital’s private sector rents have risen by 4.1 per cent this year will sadly not come as a huge surprise to most renting Londoners, who have become miserably accustomed to rent rises outstripping wage growth in recent years.

Despite that acceptance, private renters in the capital will undoubtedly be left reeling from this fresh hit on their disposable income. With rents soaring ever higher the spotlight should turn to the absence of safeguards to protect against the rocketing cost of renting in London.

There’s no getting away from the fact that London’s sky-high rents are mainly the result of a chronic shortage of housing. Ultimately the solution to unaffordable rents is to build more homes.

Yet even if we began a mass house building programme tomorrow, it would be years before the effects were felt in lower rents. In the meantime, something has to be done to help prevent rent rises that outstrip growth in wages.

Unfair rent rises and insecure tenancies afflict the lives of so many Londoners. Yet, for too long, opinion formers – most notably private landlords and some politicians – have perpetuated the fable that giving renters more security of tenure – through rent controls – poses a threat to the health of the Private Rented Sector (PRS).

For too long, we’ve have lacked the robust evidence needed to dispel this myth. That is, until now.

Recent findings from a report commissioned by the London Assembly Housing Committee reveal that under virtually every model of rent control, the PRS in the capital would still experience significant growth. This should reassure those who fear a sudden mass exodus of landlords from the market, and a resulting rise in homelessness.

It’s shameful that we have some of the weakest protection for private tenants in Western Europe. Renters can find themselves subjected to short-term tenancies, unpredictable rent rises, and eviction without cause.

In contrast, many of our European neighbours enjoy a more equal balance of power between landlord and tenant.

This balance often brings with it indefinite tenancies and caps on rent increases, and gives tenants the necessary powers to ensure their homes are properly maintained.

There has been a renewed and concerted effort to replicate that balance here in the UK. Earlier this month, Karen Buck MP’s private member’s bill, which sought to make it illegal for landlords to let out any property that is not fit for human inhabitation, was debated in the House of Commons.

Sadly it was talked out by a Tory MP, who is also a private landlord, before it could be voted on.

It is extraordinary that legislation of this kind does not already exist, and equally disturbing that some landlords remain unashamedly willing to rent a property in such a dire state, most often at the expense of vulnerable people.

Though most landlords do the right thing and ensure their tenants are housed well, it is the behaviour of their disreputable colleagues which has resulted in this refocus on improved protection and regulation.

A shift in the status quo will be met with alarm from some politicians and landlords, and the usual cries about Venezuelan-style rent control will, as always, be used to whip up fear of change. But this latest report suggests the panicked rhetoric may well be unfounded.

The report takes the forecasted growth in London’s PRS over the next ten years and examines the potential impact of six individual rent regulation models. Under all but the hardest model, the research predicts that the PRS would still grow between 35 per cent and 49 per cent during that period, in line with expectations that the sector in its current form will grow by 49 per cent.

We will, of course, continue to hear the scare stories from landlord associations about the horrors of a regulated sector. This research should calm the nerves of those who fear that rent control may have too many unintended consequences.

Those who continue to be plagued by doubts about the feasibility of this approach need only look so far as Germany, whose private rented sector is significantly bigger than our own while being subjected to comprehensive regulation.

Rent control is not a panacea, and ultimately we need a huge increase in house building. But for too long British governments have shied away from offering private tenants real protection against unfair rent rises, insecure tenancies and the threat of eviction without reason.

When you consider that almost a third of Londoners now rent privately, including a growing number of families with children, the current system of six-month to one-year tenancies as standard is neither suitable nor fair.

The data we now have suggests that under all but the most stringent rent control regimes the rental market in London would continue to grow significantly over the next decade. With this in mind, time is up on the old fable that you cannot offer tenants stability and security without causing a mass exodus from the market.

Tom Copley AM is Labour’s London Assembly Housing Spokesperson. Follow him @tomcopley

6 Responses to “Comment: It’s time for rent regulation to address our housing crisis”

  1. Roy

    Rent controls never work.

  2. Mann T.

    Rent regulation does not increase supply. It may help some for a while but it is merely sticking plaster on a gaping wound.

    We could build fifty thousand more social housing units a year in London, rent them out for a quid each and commercial residential rents would NOT fall. Reason: pent up demand is constantly stoked by UK/EU and overseas migration to London and natural increase is on the up and up.

    London is becoming a global convergence city in which developed and underdeveloped worlds merge into a megalopolis. Leftist tinkering interventionism may help sustain the illusion or delusion that the broad and ultra left have significance or can be effective. Truth is the left is an irrelevance because it has become feminised and caring and is disconnected from the world of wealth creation from whence it originated.

    Resolving the housing crisis in London means building fifty thousand social housing units a year every year for the next 20 years or London becomes Metro Manila. Djakarta, Sao Paolo.

  3. Bob Roberts

    Leaving aside the fact that price controls overstep the mark of what the government should do (it should not regulate voluntary transactions), there is no such thing as a “fair” price for housing. There are our own individual conceptions of what is reasonable, or a more real-world analysis of what is affordable (for whom?), but there is no objective standard. The reality is that this is the same as every other market, yet rather than look at why market forces are acting as they are, it is easier to blame gravity for the man jumping off the building in the first place.

    London is strangled by the green belt, and naturally, leafy surburban Surrey and Hertfordshire are quite happy about this. However, they are enjoying their right to block development at the expense of those who need to live in London.

    There are also those whose jobs have no need to be in London. It was interesting to read an article in The Guardian criticising the government’s crazy new scheme of letting landowners do what they want with THEIR land (in some cases, namely converting office blocks into housing). Of course, this was criticised on the basis that this would cause landlords to force their business tenants out by hiking the rents to convert it into housing (who’d have thought that The Guardian favoured corporate welfare!). “It’s all very well having the housing” it thundered, “but where will the new homeowners work?” However, this illustrates perfectly the problem. London doesn’t have a jobs shortage, it has a housing shortage. That’s why so many want to live there, and it’s why the cost of living is so high. However, forcing jobs out of London will not only release demand for housing by re-balancing the economy to other parts of the UK, it will also ease supply, as a home will be put in its place.

    Finally, there’s the good old bogeyman of Russian and Chinese money. I’m sure that buying up posh Mayfair apartments and leaving them vacant isn’t the root cause of the lack of affordable housing, but I suspect that it doesn’t help. On the grounds that land is finite, it may be justified to tax at a substantial rate any properties that are left unoccupied for a certain period of time (say, six months). Hopefully, the Oligarchs will stick to gold as a store of value.

    What is crystal clear however is that rent controls are not the answer. Even Paul Krugman, a left-wing economist, suggests that they are the textbook example of why price controls don’t work.

  4. Sid

    Deal with the real cause of the housing problem – uncontrolled immigration.

  5. Nick

    All estate agents and landlords should be classed in the same way as lawyers as vast sums of money are involved so therefor it needs a professional body so it can be like all other major professional body’s regulated

    if it were regulated professionally you would not be having these problems with bad landlords or dodgy estate agents claims or bad non paying tenants

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