Rent Controls Experiment Crisis
Comments are made by David Alexander, citing new research from Ireland where its rent controls experiment has raised rents and reduced supply.
A large estate agency has warned that the rent controls experiment would be a disaster for the UK, citing recent research in Ireland where large numbers of individual landlords have been quitting its private rental market, reducing supply and putting upward pressure on rents.
The research – which covers initiatives being proposed for the UK – found that constantly changing regulations and more punitive tax regimes has led to institutional landlords (such as banks and investment trusts) buying up properties and then putting up rents.
These larger landlords pay no tax, apart from on shareholder dividends.
The study, by the Institute of Professional Auctioneers & Valuers and the Irish Property Owners’ Association, found there was evidence that the creation of Rent Pressure Zones (RPZ) created a two-tier rental market, reducing the amount of quality accommodation and impacting on the value of all private properties in an area.
These rent control areas were found to reduce property values for all owners – not just landlords – and had limited impact on the levels of rent charged.
A survey of 892 landlords and agents found that 90% would not continue to invest in property – largely due to regulations, while 93% thought investors were quitting because they couldn’t charge market rent in RPZs, and 57% had decided to sell a property in the last 12 months.
David Alexander (pictured), CEO of Scottish estage agency DJ Alexander, believes the findings illustrate what most in the UK sector have been saying for some time: rent controls don’t work.
“They damage the private rented sector in the long term, which impacts on tenants, landlords, and investors, as well as affecting the value of individual homeowners in rent restricted areas,” he says.
While English housing minister Eddie Hughes this week revealed his government has no plans for rent controls, plans are already afoot in Wales and Scotland to introduce them, and Labour has said – should the party gain power – it would consider them for England.