Trade groups have reacted angrily to Labour’s proposal to introduce rent controls if the party enters government.
The announcement, made by Labour leader Jeremy Corbyn at the party’s conference yesterday afternoon, was quickly criticised by the Association of Residential Letting Agents.
“The Labour Party clearly hasn’t learnt the lessons of history. The last time rent controls existed the private rented sector went from housing 90 per cent of the population to just seven per cent. Whenever and wherever rent controls are introduced, the quantity of available housing reduces significantly, and the conditions in privately rented properties deteriorate dramatically” says ARLA Propertymark chief executive David Cox.
“Landlords, agents, and successive governments over the last 30 years have worked hard to improve the conditions of rented properties and this is like taking two steps backwards. Rent control is not the answer – to bring rent costs down we need a concerted house building effort to increase stock in line with ever-growing demand” he says.
Meanwhile the announcement was described as “a disaster for tenants” by the Residential Landlords’ Association policy director David Smith.
“History has proved that they stifle investment and reduce supply; making it much more difficult for tenants to find somewhere decent to live. Contrary to suggestions, most landlords have one or two properties, which are an investment in their pension and, rather than being wealthy landowners, they are mainly basic rate taxpayers. The private rented sector is a key part of providing more housing and has invested in providing homes for the population, putting more homes into use than other landlord types” says Smith.
“Rents are high due to the continued failures by successive governments of all stripes to build enough new homes in the right places. Instead of attacking landlords who are helping to provide homes, it would be better to treat them as part of the solution and to supplement their efforts with a sustained and well thought out building programme overseen by government” he adds,
The RLA says rent controls do not work and only serve to reduce the supply and quality of homes to let as landlords are forced out of the market and have less capital to reinvest in improving homes.
Corbyn yesterday made rent controls the keynote housing element of his 75-minute speech.
“We will control rents - when the younger generation’s housing costs are three times more than those of their grandparents, that is not sustainable.Rent controls exist in many cities across the world and I want our cities to have those powers too and tenants to have those protections” he told delegates.
No other details of how those controls would be implemented were given by Corbyn, but in a wide ranging speech he made several other references to how he would change the property landscape if there was a Labour government.
“We also need to tax undeveloped land held by developers and have the power to compulsorily purchase” he said.
On regeneration he said: “So when councils come forward with proposals for regeneration, we will put down two markers based on one simple principle: Regeneration under a Labour government will be for the benefit of the local people, not private developers, not property speculators.
“First, people who live on an estate that’s redeveloped must get a home on the same site and the same terms as before. No social cleansing, no jacking up rents, no exorbitant ground rents.
“And second councils will have to win a ballot of existing tenants and leaseholders before any redevelopment scheme can take place. Real regeneration, yes, but for the many not the few.”