A leading property industry figure has exploded the myths that lie behind the calls for private rent controls.
Ian Fletcher, director of policy at the British Property Federation, has written an opinion piece in the City AM business newspaper, criticising calls by London Mayor Sadiq Khan for the power to control private rents.
Fletcher writes: “Rent controls are seen as a ‘golden ticket’ by a few politicians – a cost-free and populist way to put money into voters’ pockets, and at no cost to the state. This explains some of the loose statistics that politicians bandy around. Sadiq Khan for example, has quoted rents rising at 16 per cent. A day later, his City Hall statistical unit referred to official national statistics of 4.0 per cent in London, and 4.2 per cent annual growth in the rest of England.”
And he goes on to debunk one of the biggest arguments put forward by politicians demanding rent controls.
Fletcher continues: “Those who benefit from rent controls are those already in their homes, whose owners will tend to moderate their rents anyway, because the benefit of keeping a good tenant far outweighs the cost of reletting. Rent controls do nothing for those desperate to get a first foot on the housing ladder. The private rented sector has housed more people in the past decade than the state-funded affordable sector has with subsidies in short supply.”
Developing his argument further, Fletcher says that there may be one circumstance in which rent controls might work - that is, if the consequent reduction in supply caused by rent controls was balanced by an increase in housing elsewhere in the economy.
He says: “Perhaps the most prescient argument against rent controls is that they deprive more people of homes. Of course, if the state was to fund a large expansion of social housing that might provide the counterweight to a shrinking private rented sector, but in my lifetime I have yet to meet a politician that is willing to put up taxes to fund a large expansion of social housing.”
The BPF chief also raises the spectre of what he calls a “bidding war” amongst populist politicians seeking to woo voters who rent.
He concludes: “It also opens up the nightmare scenario of politicians getting into a bidding war over rent controls, with rents driven to a level that bears no relationship to what is sufficient for investors to make a return or what it costs to fund the upkeep of private rented sector properties. One person advocates 3.0 per cent rent rises, another 2.0 per cent, and then another 1.0 per cent. It’s not hard to imagine.”
Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.