Property Industry Chief Destroys Rental Controls Cure
A leading property industry chief has literally obliterated the falsehoods behind the ever growing demands for private rent controls.
Ian Fletcher, director of policy at the British Property Federation, has recently written a piece in the City AM business newspaper outlining his opinions on the matter. He absolutely slates the London Mayor Sadiq Khan’s demand and stats to be handed powers by the government to control private rents throughout the capital.
The property industry chief writes: “Rent controls are seen as a ‘golden ticket’ by a few politicians – a cost-free and populist way to put money into voters’ pockets, and at no cost to the state. This explains some of the loose statistics that politicians bandy around. Sadiq Khan for example, has quoted rents rising at 16 per cent. A day later, his City Hall statistical unit referred to official national statistics of 4.0 per cent in London, and 4.2 per cent annual growth in the rest of England.”
He then discredits one of the major arguments spouted by politicians calling for rent controls.
Fletcher continues: “Those who benefit from rent controls are those already in their homes, whose owners will tend to moderate their rents anyway, because the benefit of keeping a good tenant far outweighs the cost of reletting. Rent controls do nothing for those desperate to get a first foot on the housing ladder. The private rented sector has housed more people in the past decade than the state-funded affordable sector has with subsidies in short supply.”
Taking his argument even further, Fletcher does admit there may be one situation where rent controls might be a positive which could be causing a fall in private rental housing supply; however this must be matched by an increase in social housing stock.
He says: “Perhaps the most prescient argument against rent controls is that they deprive more people of homes. Of course, if the state was to fund a large expansion of social housing that might provide the counterweight to a shrinking private rented sector, but in my lifetime I have yet to meet a politician that is willing to put up taxes to fund a large expansion of social housing.”
However Fletcher lays bare the real aim of those populist politicians looking to win renters’ votes and a real possibility of what he calls a “bidding war” between the party’s MPs.
He finishes the piece by writing: “It also opens up the nightmare scenario of politicians getting into a bidding war over rent controls, with rents driven to a level that bears no relationship to what is sufficient for investors to make a return or what it costs to fund the upkeep of private rented sector properties. One person advocates 3.0 per cent rent rises, another 2.0 per cent, and then another 1.0 per cent. It’s not hard to imagine.”
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