Labour's rent control plans explained
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Version 0 of 1. Rent rises for 11 million people living in private accommodation will be capped at the rate of inflation under a Labour government, Ed Miliband said on Sunday. What are rent controls? Rent controls are a policy in which the government intervenes in the rental market to limit how fast rates are rising.What is Labour proposing? Labour will tell landlords that they will only be able to increase rent for tenants by less than inflation for the duration of a contract. The party is also saying it wants three-year contracts to be standard to provider greater security for renters and for landlords to reveal how much the previous tenant paid. The party does not propose to set an overall nationwide limit on how much landlords can charge per property or per room.What do the Conservatives say? The Conservatives claim the policy will lead to chaos. A spokesman said the policy would force up rents and destroy investment in housing leading to fewer homes to rent and poorer-quality accommodation. They point out that shadow housing minister, Emma Reynolds, has admitted 1970s-style controls do not work.What do third parties say? There is a lack of neutral voices without a vested interest in the debate but the Royal Institute for Chartered Surveyors has said it does not recommend that a government introduce a ceiling on rent increases and criticised “arbitrary caps”. Many in the industry, for obvious reasons, appear to be opposed to the idea. The Residential Landlords Association has said: “The only way to reduce the cost of living for tenants is to boost the supply of homes to rent and yet all Labour’s policies will have the opposite effect by discouraging landlords from investing.” Why does everyone talk about 1970s-style rent controls?Actually, rents were controlled in the UK for much of the 20th century, starting during the housing shortage of the First World War. The Labour government’s 1965 Rent Act then introduced regulated tenancies and independently assessed rents, and controls were consolidated in the 1977 Rent Act. This ensured landlords could increase the rent only every two years, and only if rents of similar properties were being increased. This continued throughout much of the Thatcher era, until the Housing Act 1988. This got rid of them and the power of local authority rent agents to help negotiate lower rents for private tenants. Under this legislation, all new private sector tenancies entered into on or after 15 January 1989 would be either assured or assured shorthold tenancies and the rents on these tenancies were not regulated. Are there any examples of rent controls in other countries? Related: The housing market crisis will not be cured by political sticking-plaster There are lots of scare stories about what has happened when governments have tried to control rents. The Conservatives often cite Venezuela and Vietnam as socialist regimes that have tried to introduce them unsuccessfully. Boris Johnson even went as far back as the Roman emperor Diocletian, who tried to limit prices and people turned to barter. However, there is no evidence Miliband is taking his inspiration from ancient Rome. Many countries in the developed world have some form of rent controls, including places that can hardly be called bastions of leftwing economics such as New York and Switzerland. What about public opinion? A poll for Survation commissioned by campaign group Generation Rent found massive public support for rent controls. The result was 59% in favour, 7% against and 34% with no opinion. |