Kate Faulkner, one of the most renowned and respected experts in the UK property industry, says that the type of rent controls being put forward by Labour, and pushed for by Shelter and Generation Rent, would be harmful to both tenants and the sector as a whole.
Despite recent headlines claiming that rents are rising out of control, figures from the Office for National Statistics paint a different picture. UK rents rose by just 1% in the the 12 months to September 2014. Even in London, where most of the ‘out of control’ rent rises are said to be occurring, private sector rents only went up by only 1.5%.
Rents in the social sector – where rent controls ensure that rent increases in line with inflation – have increased by 22% since 2008/9. Over the same period, private rented sector rents increased by 7%, meaning that rents have actually fallen in real terms.
If the same rent controls of the social sector were applied to the private sector, the average private rent would be £120 more per month than it currently is.
Rent controls/caps could also lead, as it did in the late 1960’s, to the decline of institutional investment in the private rented sector. This would increase the gap between supply and demand.