Campaigning charity Shelter appears for the first time to have acnowledged that rent caps may backfire and end up harming tenants rather than helping them.
The charity - which in the past has given the appearance of supporting extensive controls on rent levels - now says that ‘blunt’ rent caps could force landlords out of the market and make life harder for tenants .
In a report commissioned by the charity and publicised by The Guardian, researchers from the University of Cambridge have warned that so-called “hard rent controls” would remove landlords’ financial incentive to invest in their properties, and lead to poorer quality homes.
The Guardian says that a survey of landlords carried out by the university revealed that 31 per cent said they would sell all or some of their properties immediately if rents were frozen, meaning less choice for those in the private rented sector and the prospect of a rental black market not subject to rent regulation.
“In practice, hard rent controls tend to create a two tier system in which some homes are subject to rent caps, while a formal or informal unregulated sector emerges that houses those in most need who do not benefit from the caps,” the report said.
The report advocates that instead of a cap there should be longer-term standard tenancies - of up to five years - with rent rises limited to inflation.
“Our first priority is tenants. That’s why although many have called for rent caps as the solution, we have found that this could add fuel to the fire by pushing landlords out of the market and making it even harder for renters to find a home they can afford” admits Shelter’s chief executive, Campbell Robb.
“This research is further proof that the government should give renters the stability they need to put down roots and save for their future by introducing longer-term tenancies with rent increases that can’t go above inflation” he says.