Here’s a quick thought on Labour’s plans for rent controls.
Existing private landlords are presumably making a profit. If they’re not, they wouldn’t be in business or would already be in the process of withdrawing their properties from the market. So, if they’re making a profit at current rents and are still allowed to raise them by inflation, they’ll still be making a profit next year. In fact, in real terms, they’ll be making the same profit as this year. And the same the year after that. So why would they withdraw from the rental market? Would they prefer to make nothing at all than the same – presumably satisfactory – level of profit they’re making already?
The argument that rent controls will always reduce the supply of property is based on the fantasy that we have a perfectly functioning market for rental property where landlords are just about breaking even. If we did, then aggressive rent controls might force some landlords out of the business. But does anyone seriously think we live in that world?In any case, Labour isn’t proposing to set rent levels, cut rents or even freeze them, just to limit rent rises to inflation for three years. In other words, to protect the profits landlords are making already. So the Tories are asking us to accept the deeply stupid argument that private landlords are making losses and just haven’t got round to adjusting their rents yet. They seem to think it’s landlords, not tenants, who are struggling to make ends meet.
What Labour’s controls will do is stop some landlords exploiting the housing shortage and people’s desperation to stay in their own homes by jacking up rents way above inflation, often with little or no notice. The balance of power in the rental market is very unequal, as anyone who’s tried renting in the last 30 years knows only too well. So who are the Conservatives really protecting here?
Two other points: first, most other Western countries use some form of rent control, including France, Germany and many parts of America. And housing for rent is generally much cheaper and more plentiful there than it is here. Second, rent controls are massively popular – a recent poll showed supporters outnumbering opponents by more than eight to one. If I were Ed, I’d stick with this one.