Labour Want Rent Controls - Or Do They?

The Labour Party have added a sixth pledge to their list of promises to the UK people: 'Homes to buy and action on rents'. This comes hard on the heels of Ed Miliband announcing a whole raft of measures to help struggling renters - the most contentious being that rent rises will be capped at the rate of inflation under a Labour government, for the duration of longer three-year tenancies.
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The Labour Party have added a sixth pledge to their list of promises to the UK people: 'Homes to buy and action on rents'.

This comes hard on the heels of Ed Miliband announcing a whole raft of measures to help struggling renters - the most contentious being that rent rises will be capped at the rate of inflation under a Labour government, for the duration of longer three-year tenancies.

That's got everybody talking about rent controls, and how they don't work. But is that what's actually being proposed?

We put that question to then Shadow Housing Minister, Emma Reynolds, back in March, when the campaigns were just starting to gear up.

She told us: "We're not proposing rent control, despite what you might have read in the newspapers.

"Our policy is that the market and the tenant and the landlord in negotiation would set the initial rent, but in order to make that security meaningful we want to avoid landlords then just hiking up the rent - which is essentially the same as evicting people if they can't afford a 10%, 20% increase in the rents."

Source: SpareRoom.co.uk

Don't beat yourself up if you don't know the difference between rental controls and rental caps. Plenty of people who work in housing (and politics) don't always get the distinction right either. What Labour are talking about is simply the amount landlords can raise rents by once a tenancy has begun.

Labour, incidentally, would like to see the standard tenancy increased to three years, although that could be tricky as most buy to let mortgages include a clause stating the maximum tenancy landlords can offer is one year.

There's been widespread criticism of Labour's proposals from all quarters. Unsurprisingly, landlords have come out against the idea. Maybe more surprising is tenant group Generation Rent warning of the dangers to renters of such a policy.

Nick Clegg, leader of the Liberal Democrats, has also warned about the dangers of landlords leaving the market, leading to reduced supply and, therefore, increased rents.

The main problem, however, is that the housing crisis won't be fixed simply by stopping further rent increases.

With rents having risen faster than salaries in recent years, the real damage has already been done. Until the next government gets to grips with the acute supply and demand crisis, housing will always be too expensive and tenants will struggle.

Current Conservative policy, which relies largely on using public money to give renters and first-time buyers a leg up via housing benefit and help to buy schemes, isn't tackling affordability at all. In the end, all this will do is place an even greater burden on the welfare system.

Here's a summary of where the main UK parties stand on controlling rents:

Source: SpareRoom.co.uk