Milliband promises rent controls

michaels

antrobus wrote: »

Because they are not proposing to set rents.

I have discovered that there are different kinds of rent regulation.

First generation - where you fix rents
Second generation - where you restrict rent increases
Third generation - where you restrict rent increases only within a tenancy

What Labour are proposing is third generation, otherwise known as rent stabilisation. You can let a property out at any rent you like, the only restriction is on the increases in rent over the next 3 years.

There is a good paper here by the LSE that explains it all. And also has some interesting things to say about Germany.

http://www.lse.ac.uk/geographyAndEnvironment/research/london/pdf/Rent-Stabilisation-report-2014.pdf

Interesting that this research done for Camden comes out very strongly against mandatory restrictions on rent, perhaps Antrobus you could bring over a few salient quotes?

It is funny isn't it, come election time policies that sound popular as soundbites but with serious problems if they were actually implemented get brought out; the problem comes if an attempt is made to actually implement them...

chucknorris

michaels wrote: »

Interesting that this research done for Camden comes out very strongly against mandatory restrictions on rent, perhaps Antrobus you could bring over a few salient quotes?

It is funny isn't it, come election time policies that sound popular as soundbites but with serious problems if they were actually implemented get brought out; the problem comes if an attempt is made to actually implement them...

What works best for us to only raise the rents by a minimum amount (to give incentive to good tenants to stay). Our tenants do tend to stay a while, my longest staying tenant recently left a 3 bed flat in Battersea, his rent was £1,495/month, when he left I marketed it at £1,800 and the first two tenants both wanted it. I think I could have got a bit more, but I was happy with £1,800. So his reduction was £295/month (16.4%, that was higher than usual because he had been there for 11 years).


I'm assuming that we will still be allowed to do this, because the legislation will probably state that CPI is the max rent increase allowed.

jamesd

"in order to provide adequately for landlords, rent stabilisation will often result in higher initial rents and more regular rent increases for tenants;"

"In Ireland, where the sector remains small and deregulation had been almost complete, the
introduction of some element of rent stabilisation at approximately market levels, together with longer- term tenancies and stronger controls on standards, appears to have produced a more stable market. Since its introduction, however, investment in the sector has come mainly from those unable to sell their owner-occupied homes"

Lovely: a little regulation and most of the supply of more properties has dried up, with it mostly coming from those left with no choice because they can't sell.

Germany: "House prices have been rising rapidly with commensurate increases in owner-occupation. The atmosphere in terms of eviction has become more toxic. Most importantly it is becoming increasingly difficult to access private rented accommodation in cities with buoyant markets. As a result, political pressure is growing for stronger rent controls in major cities (an important factor in the latest elections). Concerns are also growing about how any increase in controls might make it harder for working households to find accommodation and could constrain investment"

Germany: "rental markets are beginning to silt up in areas of housing pressure, with queues for rented properties resulting in people having to bid for dozens of units (including providing significant documentation). There is considerable evidence that new investment is not keeping pace with demand."

Germany: "A study of the German property market by the IW Institute in Cologne, published in the autumn of 2013, warned that caps may end up aggravating the supply and demand imbalance by curbing investor appetite for real estate, and slowing the construction of new apartment buildings. The message echoed that of the German Central Bank, which cautioned against trying to contain this development with rent controls"

"Many would perceive the discussion of rent stabilisation as the first step towards further regulation. Especially in high demand and pressured areas, anything that reduces supply is highly undesirable – as is now becoming strongly evidenced in Germany. "

"Our recommendation is therefore that Camden should positively enable longer-term tenancies with index-linked rent increases, voluntarily agreed by landlord and tenant"

"Any non-voluntary system would involve trade-offs. The beneficiaries would mainly be existing tenants. If the introduction of regulation were seen to limit returns to landlords - and to increase the risk of further regulatory changes - there would be a tendency to reduce the supply of private rented housing and an incentive for landlords to let to
‘easier’ tenants. "

So voluntary only, to avoid issues like reduced supply and inadequate landlord compensation that can restrict supply of properties, particularly when housing prices are increasing.

As for more explicit caps: "In April 2011 housing benefit was replaced for new claimants by LHA. This is currently capped at £258 per week for a one-bed apartment and £413
per week for a four-bed unit. The cap on LHA has made it more difficult for Camden households in housing need to find accommodation in the private rented sector. Council figures show that in 2009/10, 84% of Housing Options and Advice (HOAS) placements were in the borough; since April 2011 this has fallen by over half to 35% (LB Camden
2013b)"

Hardly a surprise that a price cap in a rising market dramatically reduces supply of properties. And that's in only three years.

cells

Generali wrote: »

Why not release building plots of various sizes and a selection of pre-approved houses? That way people can decide what sort of house they want rather than having someone else decide what sort of house is 'good' for them.

But that would require detached plots of land with gardens big enough for kids to play in

We should invent a word and put a negative spin into it to not allow such homes to be allowed. Maybe urban sprawl?

cells

ukcarper wrote: »

Well I probably better inform that you as I am old and I would consider moving into a smaller home and I know people who have or are intending to.

It's the type of small homes that I and I suspect many others of my age don't like. So by building smaller homes that people like me would like they would free up the larger homes.

In my experience the type of small home that people want in retirement are big homes

for instance I know one couple early 60s who downgraded from a modest 3 bed to a big 6 bed home......


Also I don't think that we in the UK do under occupy homes. Plenty of single person household in France and Germany too

buglawton

This is very analogous to the Labour promised power utility bill freeze.
It will cause a total stop on investment in new capacity + some instant cost cutting while the utilities wait it out till a new government with a new policy appears some years down the road. I can most definitely predict power cuts were this energy policy to happen because Labour has not even thought about the supply side.

So, back to housing, what will happen with a new landlord-adverse rent cap/rent regulation policy? I predict a very rapid seizing up of the rental market with both landlords and tenants sitting tight. Landlords will grin & bear it while awaiting that next government change...

Maybe this is a policy experiment (mistake?) that one government needs to try, just so it will be physically proven what a badly thought through policy it is. And it might as well be Labour that gets the blame for it.

padington

buglawton wrote: »

This is very analogous to the Labour promised power utility bill freeze.
It will cause a total stop on investment in new capacity + some instant cost cutting while the utilities wait it out till a new government with a new policy appears some years down the road. I can most definitely predict power cuts were this energy policy to happen because Labour has not even thought about the supply side.

So, back to housing, what will happen with a new landlord-adverse rent cap/rent regulation policy? I predict a very rapid seizing up of the rental market with both landlords and tenants sitting tight. Landlords will grin & bear it while awaiting that next government change...

Maybe this is a policy experiment (mistake?) that one government needs to try, just so it will be physically proven what a badly thought through policy it is. And it might as well be Labour that gets the blame for it.

http://www.theguardian.com/money/2015/apr/11/buy-to-let-landlords-earn-returns-of-up-to-1400-since-1996

It's a bit like freezing transport fair rises. Build more trains you silly

ukcarper

cells wrote: »

In my experience the type of small home that people want in retirement are big homes

for instance I know one couple early 60s who downgraded from a modest 3 bed to a big 6 bed home......


Also I don't think that we in the UK do under occupy homes. Plenty of single person household in France and Germany too

I think you have been watching escape to the country to much no one I know has done that. I think most people downsize to release a little money and reduce outgoings .

Of the twenty four beds in my road most are occupied by couples and more are occupied by single people than couples with children.

ukcarper

buglawton wrote: »

This is very analogous to the Labour promised power utility bill freeze.
It will cause a total stop on investment in new capacity + some instant cost cutting while the utilities wait it out till a new government with a new policy appears some years down the road. I can most definitely predict power cuts were this energy policy to happen because Labour has not even thought about the supply side.

So, back to housing, what will happen with a new landlord-adverse rent cap/rent regulation policy? I predict a very rapid seizing up of the rental market with both landlords and tenants sitting tight. Landlords will grin & bear it while awaiting that next government change...

Maybe this is a policy experiment (mistake?) that one government needs to try, just so it will be physically proven what a badly thought through policy it is. And it might as well be Labour that gets the blame for it.

I really can't see it making that much of a difference landlords can set rent they like at start of tenancy and increase by CPI during tenancy. I certainly don't think it will cause the rental market to seize up but then I don't think it will make much difference to majority on tenants.

cells

ukcarper wrote: »

I think you have been watching escape to the country to much no one I know has done that. I think most people downsize to release a little money and reduce outgoings .

Of the twenty four beds in my road most are occupied by couples and more are occupied by single people than couples with children.

It might be a London thing, leaving your smaller house or flat to move into a bogger home elsewhere.

We both have to small a biased selection to make conclusions with jist what we know. However the ONS collects data on the composition of the housing stock and what it shows is that continuously since 2000* single person households have been increasing. So if the idea is to cram more people into existing homes to solve the shortage thats not likely**




* and before then.
** whats happening is many more single person households and alsp many more higj-number households lile HMOs. A fragmentation of the market from those who can/could afford lots of housing bought at cheaper prices and those that can't afford it at current prices