I have had many types of tenancies in my time, rent control flat, council house, tied house, bedsit, shared house, licensed squat, mortgagee, and house owner, so I can see what the Labour party is try to achieve for people who want to rent their home.
Labour plans are to:
- Cap rents so they cannot rise by more than the rate of inflation (CPI) during secure three-year tenancies
- Require landlords and letting agents to disclose the rent levels charged to previous tenants so that householders can negotiate the best possible deal at the start of their contract.
- Labour’s also planning to introduce new ways for landlords to evict tenants within that three year period, for example if they want to sell your home or get it back for other reasons. These loopholes are pretty scary when you think they’re attached to a big financial incentive to use them – because that’s the only way they will be able to put the rent up in the first three years.
The problems with this are:
- As the charity ‘Generation Rent’ says – it won’t bring down rents and will incentivise landlords to evict tenants.
- Housing expert Henry Pryor said: “Don’t be taken in by Labour rent controls, it won’t make it cheaper, increase supply” but “it will distort the market”.
- Rather than reduce rents, Labour’s plans will lead to huge rent hikes every three years, higher rents overall and fewer available rental properties.
- There is a rare consensus amongst economists that rent controls impact negatively on housing market, with a recent survey finding that 95 per cent of economists disagreed with the proposition that rent controls had a positive impact on the amount and quality of broadly affordable rental housing.
Rents are high in England for a number of reasons but the main one is that the demand for homes for rent is higher than supply. Artificially keeping rents down will mean that landlords will withdraw from the market and the supply will decrease.
The only way to keep rents under control and stop house prices from spiralling is to follow the Liberal Democrat plan to build 300,000 homes. As well as ambition house build targets, the Liberal Democrats will help young people with their tenancy deposit and support people to gradually buy their home through our Rent to Own policy.
Labour in the past
- Failed to build anywhere near enough homes in Government – with house building falling to levels not seen since the 1920s.
- Even Ed Balls admitted that Labour failed to recognise the “importance of building more homes and more affordable homes”.
Liberal Democrat plans
Set an ambitious goal to build 300,000 homes a year, including in 10 new garden cities in areas where homes are needed most, in areas where there is local support, providing tens of thousands of high-quality new homes, with gardens and shared green space, jobs, schools and public transport.
Introduce a new “Help to Rent” and “Rent to Own” schemes which will provide government-backed tenancy deposit loans for all first time renters under 30. And we will help working people buy their first home for the same cost as renting, with a new model of Rent to Own homes, where each month’s rental payment steadily buys you a share in the home, which you’ll own outright after 30 years.
Directly commission house building from government. As is being trialled in Northstowe in Cambridgeshire, we will support government-backed schemes to build houses for sale, where necessary, to compensate for the shortfall in the private market.
Labour have used the example of Germany as evidence that a rent control system could work in Britain. In Germany, rents are set by the market initially but then can only be raised within tenancies according to inflation or increases in the landlord’s costs. However, this ignores huge structural differences in the housing market more broadly compared with Britain, the biggest one being that Germany has been able to deliver the number of houses required to meet demand, as demonstrated by the fact that both rents and house prices are much lower-relative to income-than in Britain.
The German example only proves one thing, which is that the priority has to be building the 300,000 homes a year that Britain needs-only the Liberal Democrats have committed to achieving this.