Rent Controls Are Not The Answer
To The UK Housing Shortage
The Residential Landlords Association (RLA) have hit back at politicians and housing and homeless pressure groups who are openly calling for rent controls in the UK’s private sector by claiming that private sector rents are falling in real terms following analysis of the official English Housing Survey (EHS).
The English Housing Survey (EHS) results are taken from a continuous survey conducted by the Department of Communities and Local Government (CLG) and show that average private sector rents increased by just £10 from £153 to £163 (GBP) per week in 2014, representing a rise of 6.5%.
In contrast, average weekly rents in the UK’s social sector increased by more, with weekly rental prices increasing 25.4%, rising by £18 from £71 to £89 (GBP).Over the same period, inflation as measured by RPI was 16.2%, or 16.7%, if the alternative CPI measurement of inflation is used.
Between 2011/12 and 2012/13, average weekly rents in the UK’s private rented sector (PRS) fell from £164 to £163 (GBP), a fall of 0.6%.
In the same period, social sector rents increased from £83 a week to £89 (GBP) a week, and increase of 7.2%.
Social housing is provided by local authorities and housing associations, with many tenants claiming Local Housing Allowance (LHA), or Universal Credit as well as other benefits. By increasing social sector rents local authorities are being allowed to increase revenues by recycling benefit payments back into their own coffers, so why should other savvy property investors be made to suffer because of rent controls?
In 2010 the Labour Government in power published a consultation document on Investment in Private Rented Housing that outlined the dangers rent controls could pose and included the following statement: “A key factor behind the decline in the PRS was the introduction of rent controls during the First World War, and these became more extensive over time. Artificially low rents reduced investment in the sector, contributing to lower maintenance standards in the stock that remained.”
UK landlords don’t want rent controls, as property rental is one of the UK’s biggest income generating opportunities available right now, sanctioning rent controls would force more landlords to quit the lettings industry causing a knock on effect to other service providers whose business focus centres around property rentals, such as letting agents, insurance providers and tenant referencing providers. This would also put a greater strain on social housing providers, forcing the UK housing market into further decline.
Limiting the amount of rent that PRS landlords can charge may benefit tenants in the longer term but it will not satisfy buy to let mortgage lenders who want landlords to continue to repay outstanding mortgage loans.
Rent controls would be very bad for business, if local authorities providing social housing can increase rental prices, why should private sector landlords be excluded?
What are your thoughts?
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