Warning To Labour - Rent Controls Just Won’t Work

If Labour plans to bring in rent controls they won’t work, a property association has warned. 

The National Association of Property Buyers (NAPB) says the idea would lead to an exodus of landlords from the private rental sector.

The comment comes days after the Shadow Chancellor hinted rent controls of some sort could be a key part of Labour’s policy-approach to handle the housing crisis. 

Labour may give local councils or mayors the power to set rent caps if it wins power in the July 4 election - despite the fact that this appears to directly contradict the party’s policy as set out recently.

Shadow Chancellor Rachel Reeves said in a BBC Radio interview she would support a cap on rents in some areas, but not everywhere.

“I think that should be up to local areas to decide, there may be the case for that in some local areas, but as a blanket approach, I’m not convinced by that,” she said on BBC radio.

Reacting to the idea, Jonathan Rolande, spokesman for the NAPB, says: “There is no doubt rent control seems to solve, at a stroke, many of the issues afflicting the property market. It has long been a socialist policy as it instantly benefits society’s poorer, whilst penalising the wealthy. There’s only one problem, a watered down version doesn’t work.

“Unless tenants have complete security of tenure – they cannot be forced to leave even if the property is sold as with sitting tenants decades ago, then landlords will simply take fright, evict and sell. Prices will fall and many homes will be bought by people who would otherwise be tenants.  But for the millions who don’t want to buy or realistically never will, the poorest and most vulnerable in society, well for them things would become far worse.

“New landlords would not enter the sector, current ones would leave. The supply of new rental homes would evaporate. Even those willing and able to pay more to secure a property, would not be able to do so. Rachel Reeves, if she was indeed flirting with the idea will know that the housing crisis has been long in the making and is extremely complex. The simplistic approach to control rent would backfire.”

Earlier this week Propertymark - the letting agents’ trade body - said it wanted Labour to come clean on its rent control policy, as the party repeatedly flip-flops on the issue.

A recent report commissioned by the former shadow housing secretary, Lisa Nandy - and called the Private Rented Sector Commission’s Independent Review into the Private Rented Sector in England - has just reported and argues for a system of rent ‘stabilisation’, which would mean annual rent increases, and stopping private rental sector landlords from moving their own properties to other sectors such as the short-term and holiday lets sections.   

Reeves’ comments on BBC Radio were in response to this report. Yet the official Labour policy is not to back rent controls, and instead push for increased protections for private tenants, plus turbo-charging the construction of affordable homes for rent and purchase.