Want to understand what\u2019s really going on in Britain, and how we can fix it?<\/p>\n
Join Vicky Spratt\u2019s subscriber-only newsletter,\u00a0The State We\u2019re In,\u00a0where she breaks down the big issues shaping the country. You can sign up to get it sent straight to your inbox, every single week,\u00a0here<\/a>.<\/a><\/p>\n Repeat after me: pretty much everybody is wrong about rent<\/a> control. In this week\u2019s newsletter, I\u2019m going to explain, while feeling increasingly exasperated, why this is the case.<\/p>\n Rent control is back in the news for several reasons. The main one is that, much to the chagrin of this Labour Party<\/a>, which is engaged in a never-ending tug of war between its left and right wings, Zack Polanski<\/a>, leader of the Green Party of England and Wales, is backing the Government into a very uncomfortable, if not entirely realistic, corner on housing policy.<\/p>\n But, hey, since when did political parties care about realism while campaigning?<\/p>\n Coming up in this week\u2019s newsletter:<\/p>\n Who\u2019s right and wrong about rent control?<\/p>\n Why the evidence on rent control is mixed<\/p>\n Labour\u2019s new plan to punish rogue landlords<\/p>\n New FeatureIn ShortQuick Stories. Same trusted journalism.<\/p>\n Last week, while launching their local election campaign, Polanski called for councils to be given the power to introduce rent controls and accused Labour of being \u201cin the pockets\u201d of housing developers because of their focus on private housebuilding to deliver new towns and new homes.<\/p>\n This prompted Labour Party chair, Anna Turley, to tell The i Paper\u2018s chief political commentator, Kitty Donaldson, that rent controls don\u2019t work<\/a>.<\/p>\n Since then, Tory MP Tom Tugendhat has joined the conversation and said<\/a> that rent control \u201calways delivers the same result: substandard accommodation for the poorest\u201d.<\/p>\n None of these politicians is quite right about rent control. Those on the left who believe it will cure the socio-economic virus that is expensive rent are wrong, because there is no definitive evidence that implementing caps on rents wouldn\u2019t have unintended consequences. Equally, those on the right, who argue rent control damages the quality and supply of housing to rent, are wrong because that\u2019s not exactly what modern evidence tells us.<\/p>\n Polanski is not the only politician currently calling for rent controls. Indeed, Mayor of London Sadiq Khan exclusively told me<\/a> that he was reiterating his request to the Government to give him the power to implement regulation of private rents in the capital, and he has already introduced rent-controlled homes for key workers. <\/p>\n In Scotland, national rent controls became law in March of this year. Under Scotland\u2019s new Housing Act, ministers will be able to designate parts of the country as Rent Control Areas. Expected to be introduced by 2027, landlords within these zones may only increase rents in line with inflation plus one percentage point, capped at 6 per cent per year. I interviewed Patrick Harvie of the Scottish Greens about this at the end of last year for Radio 4, if you fancy a listen<\/a>.<\/p>\n You could also argue that Labour\u2019s new Renters\u2019 Rights Act<\/a> is implementing a very soft form of rent control in England and Wales from 1 May by allowing renters to challenge unfair rent increases at tribunals. Indeed, right-wing commentators and politicians have argued this and criticised the Government for \u201cbringing in rent control by the back door\u201d.<\/p>\n Polanski\u2019s decision to start calling for rent controls ahead of the local elections<\/a> is politically smart. The cost of living, in particular housing, is a major concern for voters who, broadly, do not feel like the Government is acting on their behalf.<\/p>\n More in Common polling commissioned by the Joseph Rowntree Foundation (JRF) has shown that the public has a clear appetite for government intervention on the cost of renting: 79 per cent of the public agree that the government should be playing a role in ensuring private rents charged by landlords are affordable.<\/p>\n And yet, Labour is reluctant to talk up their new rent tribunals as rent control in a bid not to appear too left wing. This, ironically, leaves the Labour Government sounding as though they are doing far less to help renters than they are.<\/p>\n New analysis from the JRF<\/a> shows, in the last two years, rents in the UK have risen by an average of nearly 8 per cent \u2014 making them almost \u00a31,200 more expensive a year. Rents consume a high portion of people\u2019s incomes (usually 30 per cent or more, 50 per cent in London), private renters, particularly those on lower incomes who might once have lived in social housing, are facing major affordability pressures.<\/p>\n Politically expedient as it might be to talk up rent control as a silver bullet solution here, is it as smart a play in policy terms? The short answer is no, not really. The evidence on rent control is mixed, and it is not a panacea for the housing crisis<\/a> on its own.<\/p>\n The countries that introduced \u2018rent control\u2019<\/p>\n While the term \u201crent control\u201d is often thrown around, it doesn\u2019t always mean the same thing. Part of the reason why many right-wing thinkers and commentators are so quick to condemn any proposal to regulate private rents is that the term \u201crent control\u201d has become shorthand for a broad church of policies.<\/p>\n All of them regulate how expensive rents can be, but by pulling different levers. The three main mechanisms are: hard caps on rents that prevent rents from rising full stop, limits on how much rents can go up each year, and temporary rent freezes.<\/p>\n An example of a \u201chard cap\u201d is Sweden, which has had nationwide rent controls since the Second World War. The aim is affordable housing for all, but in Stockholm, the average waiting time for a rent-controlled home is nine years.<\/p>\n In France, the ELAN law (Evolution du Logement, de l\u2019Am\u00e9nagement et du Num\u00e9rique), which was introduced in November 2018, allowed local governments to bring in limits on how much landlords can raise rents in areas where the market is particularly hot.<\/p>\n In Germany, rent regulations known as the Mietpreisbremse ( which roughly translates as rent brake) apply to many regions, capping rent increases at 10 per cent above the local reference rent.<\/p>\n In the US, there are forms of rent control in California (statewide caps at 5 per cent plus regional inflation) for some buildings, in New York (particularly on older buildings), and in Oregon (limits on rent increases at 7 per cent plus inflation), to name just a few examples.<\/p>\n In Canada, several provinces have rent caps; in China, new regulations have just introduced rent caps of 5 per cent in major urban areas, and in Australia, there are new rent caps for sitting tenants.<\/p>\n Argentina, of course, famously implemented very tough rent control in 2020 and then scrapped it in 2023 because it coincided with the post-Covid inflation crisis.<\/p>\n Mixed evidence<\/p>\n The truth is that the evidence on the different forms of rent control which exist around the world is patchy. This means that we can\u2019t be sure exactly of what has and hasn\u2019t worked because it\u2019s too difficult to control for the specific economic factors that may have affected a particular country\u2019s economy, or compare models of rent control which are structured differently.<\/p>\n The Office for National Statistics\u2019 data on private rents only goes back to 2015. As a result, it\u2019s simply not possible to accurately chart the effect of the rent regulation we had in Britain before the 1980s.<\/p>\n Hard rent caps have, however, been found to discourage landlords<\/a> from renting out homes and reduce the supply of available housing in some places.<\/p>\n A recent paper published in the journal Science Direct<\/a> <\/a>by the German Institute for Economic Research tried to compare the international evidence. Author Konstantin Kholodilin found rent control does reduce rents for those it is aimed at, but can have unintended consequences:<\/p>\n He said: \u201cApart from an evident and sometimes intended effect of reducing the revenues of landlords, it can also lead to rent increases for dwellings that are not subject to control. <\/p>\n \u201cRent control can also negatively affect the overall supply of housing or, in particular, the supply of rental housing.\u201d<\/p>\n However, Kholodilin also noted that there may be other factors at play in each country where rent control has been studied, such as housebuilding rates, amounts of social housing and overall economic prosperity. <\/p>\n Some studies are carried out over a shorter period than others, too, which means they may only record the immediate aftermath of rent control, which, as we saw recently in Scotland, can be a surge in some rents, but fail to capture any longer-term effects. <\/p>\n No easy answers?<\/p>\n Over the years, I\u2019ve interviewed countless experts about rent control. And they\u2019d all said slightly different things. <\/p>\n Dr Rodrigo Martinez, a lecturer in real estate and finance at UCL\u2019s Bartlett Institute, has pointed me to Catalonia in Spain, where \u201climiting rent increases was effective in decreasing rents by 5 per cent without impacting the number of homes available to rent\u201d.<\/p>\n Meanwhile, Professor Ken Gibb, who works at the University of Glasgow\u2019s School of Social and Political Sciences in the subject area of urban studies, has cautioned that \u201cthere is a gap between practical evidence, data and monitoring of local housing markets and policy advice regarding the design and implementation of rent control\u201d.<\/p>\n Britain does have a problem with expensive rents. We also have 1.3 million households who qualify for social housing<\/a> stuck on waiting lists, and yet, we aren\u2019t building enough social housing. As a result, we have an enormous housing benefit bill which totals more than some government departments. And, less urgently but equally serious, middle-income renters are struggling to cover their rent, other living costs and save enough to maybe, one day, buy a home of their own.<\/p>\n For these reasons, calls for rent control are unlikely to go away. But, because the evidence is so mixed, any policy must be carefully tailored to the needs of Britain\u2019s local economies, not clumsily imposed wholesale at a national level. And, as most of the experts I\u2019ve spoken to agree, it must happen in parallel with social housebuilding and private housebuilding. <\/p>\n Right now, Labour is struggling to build new homes and, when the Renters\u2019 Rights Act comes in, it will prevent some evictions<\/a> but still allow landlords to evict people who fall behind on their rent. If there is no social housing for those people to go to, and housing benefit does not rise, that\u2019s going to create a whole new set of problems which rent control alone could never resolve.<\/p>\n Housing crisis watch<\/p>\n Speaking of the Renters\u2019 Rights Act, today the Government has announced that it will give local authorities across England an extra \u00a341m to cover costs for new enforcement powers. They say that the money will help councils oversee new legal protections for 11 million private renters, which include the end of no-fault Section 21 evictions, rental bidding wars and discrimination against tenants with children or receiving benefits. There will also be investment in civil courts, where landlords who are found to be in breach of the new rules will appear.<\/p>\n What I\u2019ve been watching <\/p>\n It was my birthday last week. As part of a birthday surprise, my boyfriend took me to see In The Print<\/a>, a play about the fight for print newspapers which centres around the story of an epic union fight between Rupert Murdoch of News UK and Brenda Dean, the president of the Society of Graphical and Allied Trades who led a futile strike against the digitisation of newspaper printing in the 1980s. Claudia Jolly is just incredible as Brenda. The play is on at The King\u2019s Head Theatre<\/a> in Islington and left me wondering, even more so than I usually do, what the great ushering in of AI may mean for how we read and consume information.<\/p>\n","protected":false},"excerpt":{"rendered":"Want to understand what\u2019s really going on in Britain, and how we can fix it? 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