Labour and Rent Caps Could Catch Out the Nice Landlords

If you are like me – and a sensible landlord – you will know that you want to keep good tenants, not upset them, such that they end up leaving.

So, when it comes to rent review times, you probably put the rent up by no more than the inflation rate, even if the rate of rent increases locally is a lot more than that. (And I know of some landlords who have not put up the rent for years – not something I advise by the way).

But could you be at risk when Labour inevitably wins the next election?

According to reports in the Grauniad, rent rises should be capped for millions of people struggling to afford what they call “soaring rates”.

The leaked proposals come from a report Labour commissioned and recommended a swathe of measures.

In a classic piece of euphemism that would not have been out of place in the days of the old Soviet Union, rent control is called a “stabilisation model” and the report’s author, Stephen Cowan, suggests a “double lock” for those renewing their tenancies. This would guarantee that any rise is capped at either consumer price inflation or local wage growth – whichever is lower – across England and Wales.

This could be very worrying for “nice landlords” like me, and maybe you too, who have kept annual rent rises moderate over the years. And it could spell disaster for landlords who have not adjusted rents at all for years.

So, it is possible that if you are 20% to 30% below market rents because of being a nice guy or girl, you might have to stay that way for some time, whether you like it or not!

Thankfully, Labour was initially cautious about doing anything that could be attacked by the Tories as being too left wing, and conscious of warnings from experts that rent controls could discourage developers from building new houses and therefore make the crisis worse – so says the Gruaniad, in a rare moment of lucidity.

The independent report will disappoint some of the dumber campaigners, who have called for more action, including rent freezes or limits on rises between tenancies.

Even the report warns such measures could make it harder to find a rental property, pushing prices up further.

You don’t say!

Though Labour has cautiously welcomed the proposals, which were commissioned by Lisa Nandy when she was shadow housing secretary, the party has distanced itself from the findings, “saying they do not reflect its official view”.

Indeed, The Grauniad understands that the report, led by Cowan, who is also the Labour leader of Hammersmith and Fulham council, will be launched on Wednesday without any shadow cabinet minister attending the event.

Phew. That ought to tell you something.

But Lisa Nandy needs to make her mind up. She rejected the idea of rent controls last summer as “a sticking plaster on our deep-seated problems”, despite previously suggesting she was “personally very invested” in allowing local mayors and councils to introduce them.

The Guardian says it “understands that several other Labour frontbenchers had pushed for tougher action but backed off amid internal concerns about unintended controls on the market”.

Sadiq Khan and Andy Burnham, the economically illiterate mayors of London and Greater Manchester, have both previously called for the power to impose rent freeze to help tenants. They need to read Assar Lindbeck, the socialist Swedish economist who said, after reflecting on rent controls in Sweden, that “rents controls (sorry, “rent stabilisation” in Newspeak) was second only to bombing a city as a way of destroying it”.  

In March, Kier Starmer refused to explicitly back rent controls, insisting it was not the party’s national policy. But pressed, while on the mayoral campaign trail last month, on whether he could in future allow Khan to implement controls in London, the Labour leader said: “I can assure you Sadiq and I work very closely together. Sadiq feels very strongly about this … it’s not our policy at the moment.”

So, all in all, it was looking like maybe the “nice landlords” with below market rents have nothing to worry about, at least for now.

But then I read on 18th May in The Sunday Telegraph that Rachel Reeves, the Shadow Chancellor, might be considering giving local councils the power to limit rent increases, after all.

Maybe Andy and Sadiq had read The Grauniad piece and been in Ms. Reeves’s ear.

Talk about flip flopping!

So this lunacy has not gone away and is still worth keeping an eye on.

You would think these Westminster Labour politicos would just simply look at Scotland where the barmy SNP/Green coalition have trashed the stock of private rented properties with their clueless rent controls.

Will these clowns ever learn? Or do they know in their hearts that rent controls are a dumb idea, but they know the public is dumber still and will vote for this nonsense – so they put it in their manifestos anyway and then enact it, even though they know full well that it will hurt all the people who find they have no place to live and cannot move to work or study.

“Stupid is as stupid does!” as Forrest Gump said.

No landlord should have rents that are more than 20% below market rent, no matter how good the tenants are. You are in business; you are not running a charity.

And still on politics, I do think it a racing certainty that Labour, once elected, will quickly mandate that all rented properties must be minimum EPC grade C, as part of the Net (Nut?) Zero ambition that useless former PM, Theresa May legally signed us up to. Prepare for that to happen – and don’t be caught out with a property you legally cannot let, lest it upsets Saint Greta and makes her cry.

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4 comments

  • If the collectivists get elected, then it’ll be very likely that they’ll try their favourite “one size fits all” conformity approach to policy. The rental market is a market, and introducing legislation only alters incentives on both sides sending skewed signals to all participants. The big corporate landlords and their build to lend cousins will already be lobbying for greater regulation, rent control being one of them, as they would prefer less competition and that means fewer if any independent landlords. Cosying up to govt and their heirs will enable govt to also achieve its policy of uniformity and control. “Win win” for govt and corporate landlords, “lose lose” for independent landlords and tenants!

  • Looks like Labour have had second thoughts and are now going for rent controls probably after hearing from big corporate landlords. It’s a “win win” for Labour as they get to continue their war against private property owners/small business owners as well as getting more renters reliant on big landlords that will just see further political interference as the cost of doing business.

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