To ask the Secretary of State for Communities and Local Government, if he will bring forward legislative proposals giving local authorities powers to implement rent controls.
9 February 2015
The latest Office for National Statistics figures show that private sector rents have actually fallen in real terms across England since 2010 (rents up 10.6 per cent from May 2010 to December 2014, compared to CPI inflation of 12.1 per cent). Indeed, regulated social rents have risen faster in recent years; average weekly rents rose by 25.4 per cent from 2008-09 to 2012-13 in the social rented sector, compared to 6.5 per cent in the private rented sector (DCLG, English Housing Survey: Headline Report, February 2014, p.19).
The historical evidence is clear that rent controls resulted in the size of the private rented sector shrinking from 55 per cent of households in 1939 to just 8 per cent in the late 1980s. State-imposed price ceilings meant that many landlords could not afford to improve or maintain their homes, leading to worst conditions for tenants. Ultimately, the reduction in supply from such controls would push up rents and reduce choice for tenants.
Indeed, this point was confirmed in policy documents published under the last Labour Government: “A key factor behind the decline in the private rented sector 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 a tenure shift to owner-occupation and lower maintenance standards in the stock that remained. A turning point was the 1988 Housing Act – which removed rent controls and introduced short hold tenancies” (HM Treasury, Investment in the UK private rented sector, February 2010, p.11). The same analysis also observed that property conditions (proportion of Decent Homes) have improved faster in the private rented sector than in the owner occupied sector, without rent controls.
I appreciate the HM Opposition have now swung to the left, and are calling for a form of state rent controls, as part of their business-bashing agenda. Yet rent controls would decimate the action that this Government is taking to increase private and institutional investment in new rented accommodation, as well as leading to worse property conditions for tenants by discouraging investment in existing accommodation.
As Swedish economist, Professor Assar Lindbeck, famously remarked: “rent control appears to be the most efficient technique presently known to destroy a city – except for bombing” (Lindbeck, The Political Economy of the New Left, 1972).