Property chief locks horns with rent control campaigners
A property management chief is arguing that rent controls would restrict mortgage loans to buy to let investors and drive existing investors out of the market.
The views, put forward by David Alexander of Scottish property management firm Apropos by DJ Alexander Ltd, comes as campaigners in both London and Scotland argue for rent controls.
One group active in Scotland, Living Rent, calls for rent controls amongst other restrictions on the private rental sector. Its website has a headline over a report of one of its meetings saying: “We’re out for power and all the locks and landlords in the world won’t stop us smashing through.”
But David Alexander says the campaigners’ ambitions would backfire.
“The issue has arisen because in some cities tenants believe they are facing unprecedented rent rises resulting in affordability issues. This is pushing individuals out of these areas due to a lack of supply in the private rented sector” he says.
Alexander calculates that both London and Scotland have experienced cumulative average rent increases over the 11 years from 2007-2018 of 18 per cent at a time when inflation for this period was 36.3 per cent – indicating rents rising at just under half the rate of inflation.
“Yet the view persists that controlling rents in the private sector will resolve the affordability issue which is undoubtedly impacting on the most popular areas of the UK” he claims.
He says the rent control argument fails to accept that the causes of increased rents are complex and not down to “perceived landlord greed.”
Instead, he says the causes include a dramatic increase in demand for homes as a result of a UK population increase of over five million since 2007 while total dwelling numbers have only risen by 1.654m over the same period.
The increase in demand for private rental properties relates to a rapidly rising population coupled with a static or even declining social housing sector, Alexander believes.
“The result is that there are many people who feel they are missing out on home ownership and paying the private rented sector for longer periods than they did in the recent past.”
But he insists rent control “belongs to a different era” and would lead to landlords exiting the sector, and mortgage lenders being more restrictive in granting funds to investment buyers – meaning, of course, that fewer homes would be on the lettings market, thus driving up rent.
“Instead of seeing the private rental sector as the enemy and seeking to control their activity, campaigners and politicians and everyone involved in the housing sector should be working together to find solutions which ensure that everyone can have a home” Alexander concludes.