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Leading Property Industry Chief Reveals How Rent Controls Will End Up Harming Tenants More

Written by: Mary-Anne Bowring 24/03/2023
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Rent Controls: A Populist Move That Could Harm Renters

Many experts in the UK property market believe that rolling out rent controls is a populist move. Instead of helping renters, it could ultimately hurt them, as rent controls often distort the rental housing market. Rent control is not new in the UK. Regardless of how it has been introduced in the past, it has consistently led to poorer-quality rental homes and a reduced number of properties available to rent. In some cases, it has even resulted in rent increases.

Industry Leader Exposes the Myths Behind Rent Control Calls

A leading figure in the UK property industry has challenged the arguments for private rent controls. Ian Fletcher, Director of Policy at the British Property Federation, has strongly criticized London Mayor Sadiq Khan's calls for controlling private rents. Fletcher argues that rent controls are simply a cost-free and populist way for politicians to appeal to voters, with no real cost to the state. He also points out inconsistencies in the statistics presented by those advocating for rent control. While the Mayor claims that rents are rising by 16%, the City Hall Statistical Unit reports a much lower figure—only 4% in London and 4.2% in the rest of the UK, based on official national statistics.

Rent Controls Could Hurt First-Time Renters

According to Fletcher, rent controls mainly benefit existing tenants, as responsible landlords tend to moderate rent increases for good tenants to avoid the risk of losing them. However, rent controls can be detrimental to those trying to rent a home for the first time. The state-funded rental sector, often labeled as affordable, is always short of homes. In contrast, the private rented sector has accommodated more people in the past decade, filling the gap left by insufficient government housing initiatives.

The Only Way Rent Controls Could Work

Fletcher suggests that rent controls could be viable only if the government offsets the reduction in rental homes by significantly increasing housing supply elsewhere in the economy. This would require large-scale funding for social housing to counteract the shrinkage of the private rented sector. However, Fletcher expresses skepticism about the feasibility of such a move, as he has yet to see a politician willing to use taxes to launch a social housing expansion project.

The Political Bidding War Over Rent Controls

The BPF chief has criticized what he calls a "bidding war" among populist politicians, who compete to win votes from renters by proposing ever-stricter rent control measures. He warns that this could create a scenario where rent caps are set at levels that make property investment unviable and make it difficult for landlords to cover property maintenance costs. He describes a situation where one politician suggests a 3% rent cap, another lowers it to 2%, and yet another pushes it further down to 1%, creating a system that is detached from economic realities.

Supporting Sustainable Rental Growth Over Rent Controls

Fletcher emphasizes that rather than imposing rent controls, efforts should focus on sustainable solutions that ensure a fair and functional rental market. As a leading operator of homes Built to Rent, The Ringley Group is committed to facilitating the development of new rental homes. They also work with corporate landlords to prioritize resident satisfaction over excessive rent hikes, ensuring a balanced and fair approach to rental pricing.



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