Is the grass always greener on the other side?

Matt Oliver, NLA Public Affairs Officer, on more evidence to suggest rent controls simply aren't the answer.
Matt Oliver, NLA Public Affairs Officer, on more evidence to suggest rent controls simply aren’t the answer.

Today’s publication of the interim report from LSE, commissioned by the NLA  debunks the myth that rent control is a golden bullet, easy to implement and guaranteed to work in the UK.

The launch comes on the day that the four Labour candidates aspiring to be leader (and potentially our next Prime Minster) go head-to-head in a live TV debate.  The Private Rented Sector (PRS) and housing is going to be top of the agenda, especially as Labour’s London Mayoral candidates are all advocating some form of rent control in the Capital as they pitch for votes in their separate election primary.  This is all despite the fact the Mayor has no such powers to implement such a scheme.

Rent controls are non-transferable policies

When it comes to the PRS, LSE’s report shows the grass definitely isn’t always greener. For example, the model cited for the policies advocated by Labour during the election was Ireland but, as the report concludes, the controls introduced in the last few years have had very limited effect.  In fact the country is experiencing a housing crisis, with rapidly rising rents and a near-standstill in new housing production.

Ah, but what about Germany?

Yes of course, Germany. This is often cited as the best example of a country with a stable PRS, yet LSE’s report found that the system of indefinite security and in-tenancy rent stabilisation has in the past been cushioned by low house prices and demand, something we don’t have here, whilst initial rents can be well above current market levels in high-demand areas. Meanwhile in San Francisco and New York it looks like the main beneficiaries of interventionist policies are older middle class households, with the young hardly getting a look in.

What’s the moral of the story?

Well, in a nutshell: rent controls sound great on the surface but the evidence points to the contrary. The NLA is a strictly neutral political organisation.  However, as Labour members listen to these proposals for the PRS and contemplate choosing their third leader in eight years, much like some do with Tony Blair (the only Labour leader to win three successive General Elections), they will remember that you often don’t know what you’ve got till it’s gone.

*LSE’s final report, due to be published later this year, will examine London in more detail to see specifically how renters in the Capital would be affected by various proposals for change.

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