Policy

Response to Shelter’s Rent Control Research

Earlier this week shelter published some research which poured some cold water on calls forshelter-logo rent control. Below a Digs member’s looked into the research and responded:

We are always rightly suspicious when an organisation commissions research which it then spins to back up what they’ve been saying all along. That’s what’s happened this week with Shelter’s take on research they commissioned from academics at Cambridge University. Whilst the research itself said “The conclusions, however, are very tentative”, Shelter Chief Executive Campbell Robb said the research gave a “resoundingly clear conclusion” against rent caps.

Why are the conclusions described as ‘tentative’ by the researchers?

Firstly, the research is full of qualifiers. For example the researchers said their “short sharp research project gives an indication of what the impact of the six scenarios might be.” Not what they will be.

Secondly, the research was based on asking landlords and lettings agents to imagine what they would do if something were to happen. If I ask you what you would do if… then you may be able to take a guess, but given that rent control has not existed in the UK since 1989 it’s unlikely the answers are based on experience and instead reflect the perceptions of what rent controls would do. There was no asking tenants what they thought would happen if their rents were controlled either…

Thirdly, the landlords were surveyed online only – as any campaigner or lobbyist knows, it’s very easy to mobilise supporters to respond to surveys, newspaper polls, and consultations. In Waltham Forest, the local renter group found that online responses to the Council’s licensing scheme were heavily against, whereas responses from doorknocking landlords in the Borough were in favour of licensing. One explanation is that the landlord lobby is better able to mobilise their membership to respond online compared to the vast majority of landlords who aren’t members of the landlord lobby and are often in favour of common-sense regulation.

Fourthly, the scenario assumes that landlords will let their homes remain empty rather than sell them. Every home sold by a landlord in a rent controlled system will either go to a landlord who is willing to rent under rent control, or to someone who wants to buy and live in a home. If we want to tackle the housing crisis, then we can’t continue to have high house prices, but sadly, Shelter seem to have conceded the point rather than looking at how we can cool down the speculation of housing in the UK.

Fifthly, Shelter’s rent restraint model doesn’t reflect how rents work. In most tenancies at the moment you will have modest year on year rises. Big increases in rent within a contract are effectively a way to evict tenants. However, when a contract comes to an end and a new contract starts is when a landlord or lettings agent increases the rent to a much higher level.

Finally, by focusing against the case against rent controls (a policy that we’re unlikely to see under the present government), Shelter have potentially alienated many of those housing activists and campaigners who look to Shelter for support.

Please do let us have your comments below!

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One thought on “Response to Shelter’s Rent Control Research

  1. RENT CONTROL

    I am against rent control, because all it will do is create a lot of unintended problems. Firstly, landlords will be forced to increase rents, especially those who have not increased rents in years. I don’t increase rents, because I don’t want the tenant to leave. Of course, if my tenant does leave, then I will need to renovate and refurbish the property, so if I have improved the property, it is right that I get the market rent. The new tenant will enjoy, no further rent increases.

    However, a temporary rent freeze for 3 years, is not a bad idea, there should be exclusions for those who have not increased rents in the previous years and also for people who ‘register’ that property has been rented out at below market rent (for instance if someone has rented a property to a ‘friend’ and is renting to them a below market rents). .

    TAX CHANGES
    George Osborne is trying to discourage But-to-Let and I agree with this in principle and has increases tax increases and it will only put an upward pressure on rents. if I have not put up rents in years, is it fair that I am faced with higher costs?. Most of those who campaigned for it where tenant groups. It seems such campaigning comes out of ‘spite’ rather then constructive solutions.

    HELP-TO-BUY
    In 2007 houses prices crashed. However,

    —————– PROPOSAL ———————

    FREEZE ON BUY-TO-LET PURCHASES
    A more constructive solution, would have been to a freeze “Buy-to-Let”. This is to stop new entrants coming to the market. Especially big hedge funds. In other words all the properties on sale will be available for owner-occupiers only. The only exclusions would be those who rent out their own home if going overseas, owners having mortgage problems or other some reasonable reason. House builders who struggle to sell their properties (in case of economic downturn) should be allowed to rent them out, as last resort.

    TAX RELIEF TO SELL
    People have invested BTL to provide a pension for the future. Renting a property is not illegal in the UK I have no reason to sell, however, if tenant groups are demonising landlords, then it is only fair they campaign against Capital Gains Tax which are a disincentives to sell. Why should I loose 28% of the property?. Especially, if I am doing it as a favour. (I may miss out on future gains).

    When a home owners sells their home, they don’t pay tax. I have already paid tax on the rental income. If I had been a German landlord, I would have no reason to sell. In Germany renting is a lifestyle choice and people are happy to rent all their lives. Germans don’t think of themselves inferior if they don’t own their own home.

    The attitude Germans to their landlord is far more positive. The landlord does not even need to provide a kitchen or a bathroom!. In Germany, if a property has been owned for 10 or more year, it can be sold tax free.

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