Rent Controls:

Richard Leonard, in his campaign to succeed Kezia Dugdale as Scottish Labour leader (now elected leader), has staked his claim to introducing a ‘Mary Barbour law’ for rent controls.

The biggest applause from the crowd at Scottish Labour’s spring conference came after a proposal by Leonard to introduce a “Mary Barbour law”, which he said would “reign in the power of landlords” and create “stringent” rent controls.

Mary Barbour led the 1915 Glasgow rent strikes, and a statue of the rent strike legend was recently unveiled in her honour in Govan.

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He said Scottish Labour, if he became leader, would do more than “tinker around the edges” of society’s problems and introduce a radical set of policies which put power back into the hands of the many.

New legislation recently introduced by the Scottish Government has given local authorities the ability to introduce limited caps on rent increases in what they call “rent pressure zones”, primarily the major cities in Scotland, but Leonard’s proposals, like those of Jeremy Corbyn in England, would it seems go much further.

Leondard has proposed a similar system to that proposed by the Living Rent Campaign, a points-based system which would link rents to housing standards, and then rent control would be tied to the average income of Scotland’s tenants. In their policy paper, Living Rent has argued that linking a package of rent controls to housing quality would force landlords to drive up housing standards in the private rental market.

Jeremy Corbyn has set on a path for Labour policy in England, lengthening tenancies to five years with inflation-linked controls on rent rises within these terms, but Mr Corbyn has also said in a recent speech that Labour would go further than this and directly limit rent, based on models seen in other countries.

Meanwhile, rent controls have been discredited around the world as long-term counterproductive to a rental market and tenants in particular.

Research carried out by the London School of Economics (LSE) for the London Borough of Camden concluded that:

“Economic principles suggest that traditional rent freezes (often called first generation rent controls) work badly, especially over the longer-term. They lead to immobility, poor quality housing in the sector and incentives for landlords to transfer to other tenures if possible.

“Almost all countries that have had such controls have either liberalised their systems completely (the UK) or limited their purview to rent increases within tenancies (often called rent stabilisation).”

Even housing charity Shelter has said that Jeremy Corbyn’s proposed rent controls could “exacerbate Britain’s housing crisis”, and “would result in a reduction of rental property.”

Polly Neate, chief executive of Shelter, has said that:

“What ends up happening is landlords will just sell because they can’t make any money. That actually exacerbates the crisis, because you end up with an even greater housing shortage.”

Given that small-scale landlords continue to play such a vital role in the UK in the provision of housing for tenants in the private sector, including government funded tenants on social benefits, upending a delicate balance stuck by the shorthold tenancy, at market rents, over the last 30 years or so, is perhaps a risky strategy.

Dr Julie Rugg of the Centre for Housing Policy, at the University concludes in another LSE report:

“Evidence from across Europe shows that small landlords own a large proportion of the sector. Even Germany, traditionally held up as the model for institutional investment, has a substantial proportion of properties owned by individual landlords.

“Given that this situation is likely to continue, it is essential to consider in more detail the economics of small landlordism, and – perhaps less tangibly – the cultures of letting across Europe. If we allow the contention that small landlordism might not be innately problematic in the UK, we need to ask what successful small landlordism looks like.”

©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law, always seek professional advice.

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