Why we need a national rent cap

Why we need a rent cap

By Alistair Mitchell

This year £23.8 billion will be spent on Housing Benefit. The budget keeps spiraling thanks to rent increases (37% in last 5 years alone). Yet the government’s response to this huge bill hits only tenants, particularly in London, with housing benefit limits and Bedroom Tax.

Not one of the political parties has proposed a RENT CAP. Rent Caps are in use throughout Sweden to stop tenants being overcharged by landlords and their agents.

Imposing a Rent Cap of 90% of average rents in the UK would:

1. Save £2.38 billion in Housing Benefit – without hitting tenants.

2. Relieve the financial pressure on urban tenants.

3. Dis-incentivise ‘Buy-To-Let’ landlordism.

4. Free up more property for first time buyers currently priced out of the market by the ‘Buy-To-Let’ brigade.

Landlords have ‘filled their boots’ since the stock market crash in 2008, using ‘Buy-To-Let’ mortgages to expand their empires, driving up property prices as more enter the market for investment, not need; and increasing rents in line with gains from those price increases.

Housing Benefit is now as much a vehicle to feed landlord’s profits, as it is a shelter for needy tenants.

It is time to impose Rent Capping to tackle landlord profiteering and relieve hard-pressed tenants.

9 thoughts on “Why we need a national rent cap

  1. Pingback: nationals rent cap | dummiesactivismuk

  2. it’s a fact that in this country there is no protection for people who rent .We should be brought inline with france and Germany were the rent levels are controlled by government .But l fear this will never happen business comes before peoples welfare in good old England and always will it be sadly.

  3. Alistair Mitchell “If a tenancy starting in 2007 had no rent increases at the end of each separate six month tenancy period until 2013, one would be surprised at the landlord’s forbearance.”

    The real world does n’t work like that. I spoek to a prospective tenant who said she had no rent increase in 5 years. Perhaps, regular rent increases are common in ‘trendy’ Hackney but certainly not so in less fashionable parts of London. I would uncomfortable with demanding a rent increase every 6 months… I have never done so and I never will.

    Why should I loose a tenant for the sake of an extra tenner week?. Why should I have to hand over 5% of the year rent in commission to a letting agent to find me a new tenant?. Good tenants are like gold.

    Only an immature landlord, would be increasing the rent every six months. If the property becomes empty, I have the expenditure redecoration, new furnishing, lock changes, mortgage costs etc… A no rent increase policy is good for business and fairness.

  4. “In addition, from April 2014, the annual LHA rate increase will be capped at 1% per year (in line with the other social security benefit increases) or the 30th percentile of local rents – WHICHEVER IS THE LOWEST.”

    The LHA is capped at 1%. I noticed this was not mentioned on Hackney council’s web site, but it has been widely reported elsewhere.

  5. Approximately 30% in total, of MPs from all parties are rental landlords (one has 66 properties). The information is in MPs’ Declaration of Interests. However, this doesn’t seem to bar them from voting on such issues. Buy-to-let mortgages get tax relief of some sort.
    Remind me again, who makes the rules?

  6. On the contrary, the LHA rate IS determined by market rent. It is the 30th percentile of the market rate – ie. the bottom third of it. Remember, the market rate is not a reflection of actual worth or value: it is artificially inflated by landlords and letting agents who are in a position of take advantage of the fact that social housing is scarce and even people on good salaries cannot buy homes. That’s how we’ve got to a point where the LHA rate for a one-bedroom flat in Hackney is £1061 per month, while the official Fair Rent (which only applies to pre-1989 tenancies, though it should apply to all) is £575 per month for a whole 3 bedroom flat in Hackney.

    The fact that rents are soaring is not a rumour. It is a fact that is perfectly checkable through the Valuation Office Agency (VOA), which records the rents that people actually pay. So you simply can’t argue that landlords should be ‘thanked’ for accepting lower rents from people who claim housing benefit; rather, they know that they can set rents as high as they want and the council will have to pay it because otherwise people will be homeless. Essentially, it’s a kind of ransom and landlords know it.

  7. Response from Alistair Mitchell, the author:
    Goodness me, ‘vile’ rumours? Well the average rent increase of 37% over the last five years was reported by The Times, if you’d like to complain to the editor about ‘vileness’!
    If a tenancy starting in 2007 had no rent increases at the end of each separate six month tenancy period until 2013, one would be surprised at the landlord’s forbearance.
    The reality for most tenants is that landlords and/or their agents take advantage of shorthold tenancies and the ever-increasing value of London property as rents continue to rocket.

  8. “Landlords have ‘filled their boots’ since the stock market crash in 2008”

    Why would anyone “sensible” be putting money in BTL? Hackney house prices crashed too since 2008-2012?. They have only just receovered.

    Banks are looking at a 40% deposit on a Buy to let. On a £300k property, that is a £120k as a deposit. I don’t think many landlords have that kind of cash in their bank.

    If I had £120k, I rather enjoy the money rather then buy a property. Thank you very much!

  9. Since the banking crisis in 2007, the (Local Housing Allowance) LHA rate has been largely unchanged, that is 6 years of near flat rents. In other words, the a single mother and child who rented a home in 2007 on Housing Benefit, will be paying largely the same rent in 2013. That is almost 6 years of no rent increases. The LHA rate does not track market rents, in future it is going up by 1%. So is it fair to ridicule landlords and spread vile rumours of rents soaring?

    The ‘market rent’ is much hight then the LHA rate, but a landlord with a sitting housing benefit tenant is not getting market rents. So instead of thanking ‘private ’ landlord who have housing benefit tenants and are accepting a lower rent. All I can read about it ‘greedy landlords’ and ‘rent going up’.

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