Research Suggests Rent Controls are Unsuitable for UK
June 26, 2015 |
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According to the findings of the interim report by the London School of Economics and Political Science (LSE), which was commissioned by the National Landlords Association (NLA), rent controls and similar policies which are said to work well in other countries would not work so well in the UK.
The study looked at evidence from a broad spectrum of cities and countries which have stronger regulatory policies than the UK, including New York, San Francisco, Germany, Ireland, and the Netherlands.
Germany is often cited by those arguing in favour of rent controls as the best example of a country with a stable private rented sector. But the LSE says that their system has been cushioned by low house prices and demand, and that, in high-demand areas, initial rents can be far above current market levels, regardless of regulation.
However, Ireland was apparently used as the model for Labour’s proposals in the run-up to the General Election last month, and so probably serves as the most pertinent example. The LSE says that the rent controls introduced in the last few years have had a very limited effect. Rents in Ireland are rising sharply and housing production is at a standstill.
They said there was clear evidence that inflexible controls reduce supply. Where there is low supply and high demand, rents inevitably rise.
Kathy Scanlon of LSE London said of the research that “the strongest message was that what may work in one country cannot simply be transferred to a different market and institutional environment.”