Please Note: This Article is 4 years old. This increases the likelihood that some or all of it's content is now outdated.

The Shadow Chancellor of the Exchequer, John McDonnell MP, has today given his speech to the Labour Party conference, which the Residential Landlords’ Association, representing some 20,000 landlords, says is wrong on the Private Rented Sector (PRS) – rented housing.

During the speech he referred to cutting “billion pound tax breaks given to buy-to-let landlords” and called for action to “control exorbitant rents.”

The RLA says that Mr McDonnell failed to remind delegates that, in the words of Paul Johnson, Director of the Institute for Fiscal Studies, “rental property is taxed more heavily than owner occupied property.”

He failed also to tell the conference that Labour’s own Ministers in the Welsh Government have argued against rent controls as they reduce the quality of housing and stifle the supply of much needed new housing.

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In February this year, the Minister for Communities and Tackling Poverty, Lesley Griffiths AM told the Welsh Assembly:

“I do recognise that rent control can look attractive initially, but I think previous experience shows that rent controls reduce the incentive for landlords to invest and can then lead to a reduction in quality housing. Those properties that are still subject to rent control under the Rent Act 1977 are often of the poorest quality, so I think such a proposal would require very careful consideration. Again, I think that could give possible unintended consequences to the supply of private rented properties.”

An LSE study concluded about Rent Controls:

“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)”

  • The RLA represents almost 40,000 private sector residential landlords in England and Wales housing some 250,000 households.

Paul Johnson, Director of the Institute for Fiscal Studies delivered his remarks on the taxes paid by the private rented sector during the IFS’s assessment of the Summer Budget. Mr Johnson’s speech is available in full here On page 4 he notes that “rental property is taxed more heavily than owner occupied property.”

On the 10th February 2015, Lesley Griffiths AM (Labour), the Welsh Minister for Communities and Tackling Poverty made a statement to the Welsh Assembly introducing the Renting Homes (Wales) Bill. The transcript is at here   As part of this, Plaid Cymru’s Housing Spokesperson, Jocelyn Davies asked Ms Griffiths:

“Minister, I wonder if you’ll tell us if you’ve considered rent control methods in the lead up to this Bill and, if so, why it doesn’t appear to be included.”

The Minister replied:

“Okay. I thank Jocelyn Davies for her questions. In relation to rent controls, I do recognise that rent control can look attractive initially, but I think previous experience shows that rent controls reduce the incentive for landlords to invest and can then lead to a reduction in quality housing. Those properties that are still subject to rent control under the Rent Act 1977 are often of the poorest quality, so I think such a proposal would require very careful consideration. Again, I think that could give possible unintended consequences to the supply of private rented properties.”

Please Note: This Article is 4 years old. This increases the likelihood that some or all of it's content is now outdated.
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