Petition for a rent cap in London

[Robert Poste's Child]

For anyone who is interested, there is a petition underway for a rent cap in London.

Their arguments are that, in addition to supporting those who can't afford to buy, it would discourage buy-to-let, which would in turn get some housing stock back onto the market, and massively reduce the huge amount of housing benefit that currently ends up in the private sector.

Click the link below to sign.

http://you.38degrees.org.uk/petitions/introduce-a-rent-cap-in-london

[????]

Yes, brilliant. I will sign it, sell my place in SE22 and claim my ?195 four bedder in Belgravia, toute suite

[Henry_17]

RPC,

Even though I think price controls are a terrible idea all else equal, I agree that when you have a "free market" administration lobbing the taxpayer balance sheet behind the housing market less than one business cycle and less than one political cycle after the last crisis, they might just make sense.

[StraferJack]

"Yes, brilliant. I will sign it, sell my place in SE22 and claim my ?195 four bedder in Belgravia, toute suite"

except it wouldn't work like that would it?

the current rent wouldn't be reduced to ?195 a week

the current tenant wouldn't be likely to leave to let you move in

You wouldn't sell your place in SE22

[Robert Poste's Child]

Not sure the terms are to die in a ditch over but if it helps force a conversation that results in some controls over the rental side of the housing market then a good thing possibly?

[????]

So, Mobility crushed in an instant? Build more houses not rent control is the solution as any fool know

[StraferJack]

Building is no simple solution.

Developers want to build pricey. Pricey or cheap most are bought by investors (even the cheapest don't come within most budgets) existing owners don't want values to dip too much anyway

[Otta]

Yes but any new houses they build (including the "affordable" one) are not affordable to most people. I don't think any one thing is "the answer".

[Otta]

X Posted with SJ.

[Loz]

Doesn't make economic sense, as you are fighting basic supply and demand. The whole issue is that more people want to live in London than currently there are houses. So, if you impose a rent cap:

1) Rental properties will disappear to almost nothing at that rate, as it would be economically infeasible. This would create a black market where backhanders and on-the-sly payments would decide who got the property. Also, anyone on benefits would find themselves the first off the list of suitable tenants.

2) Alternatively, you could impose German-style rent controls, but this still allows the initial rent of a tenancy to be at market rate. Even Shelter see that (1) is dangerous, and so support this, with the added tenant rights. But this would also reduce the number of rental properties, expect that initial rate to be a lot higher.

3) It would temporarily bring down house prices as BTL properties were put onto the market, but that would be short-term and would probably only bring house prices down to about 2000 prices at best. The supply/demand thing would kick in again and house prices would bounce.

I don't see why people get so worked up about rent caps - they are a bad solution to the problem. You can't dump the responsibility for social housing onto the private sector and then complain when the private sector reacts to the additional demand in the only way it knows how. And if you try and interfere with it, you will only end up creating bigger problems than you have now.

Demand more social housing provided by government. It's the only sensible and, indeed, workable solution.

[????]

Price controls ( especially ones miles away from reality) = unintended consequences, lack of investment in the asset and/or taxpayer subsidies etc etc

*take note Labour Party energy 'policy' cheap fuel for everyone, huzzah

[StraferJack]

Who would qualify for social housing in 2015. What would cut off point be?

Rent control isn't pie in sky dreaming. Depending on how it's implemented it works across many major cities

[Loz]

StraferJack Wrote:

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> Rent control isn't pie in sky dreaming. Depending on how it's implemented it works across many major

> cities

Rent control, yes. Rent caps, as per this petition, no.

But it can still be no solution - rents in rent controlled Berlin is currently rising at three times the rate of uncontrolled London.

[StraferJack]

True loz. But you're talking about different starting points.

[Seabag]

I'm reading a book on the pre-fab 'movement' after the war

Very interseting read, Catford features large

Much joy ensued, and could it work again

[ratty]

It's already being done. Google y cubes.

[right-clicking]

The Tories don't want social housing at all! Thatchers government privatised the council properties under the guise of right to buy, as a way of ending recession at that time , empowering the new owners into the world of credit and debt!

These and many private homes have now changed hands into a new class of investor, Buy to let!

The upward march of capital wealth shows no signs of reversing and the trickle down effect of capitalism is well north of where any sensible economy should be and is ultimately self-defeating.

Whatever happened to the housing associations? these started and maintained some great projects and property solutions, their incorporation into the council's domain put it death methinks.

The only solution thus far promoted by this current shower of fools is to impose benefit caps onto the claimants of H/B, and most of these are working folks! where has the creative thought process buggered off to? merely tinkering around the edges with half hearted policies of speeding up and relaxing of red tape re-planning for extensions etc has had a negligible effect so far.

A total lack of political will is half the problem, it will end in an increasingly unaffordable city with the majority of native residents effectively, economically and socially cleansed.

Building more is all too obvious, co-operatives and self-build along with stricter requirements to build on land purchased without development, Raise the tax on buy to let income and use it build more really affordable homes?

I rent and it takes up a whopping 70% of my earnings. How shitty is that?

[Loz]

right-clicking Wrote:

-------------------------------------------------------

> The Tories don't want social housing at all! Thatchers government privatised the council

> properties under the guise of right to buy, as a way of ending recession at that time , empowering

> the new owners into the world of credit and debt!

Well thank goodness 13 years of Labour put an end to that.

Oh, hang on...

[right-clicking]

Loz! The 13 years of so called Labour........not! Blare was a closet Tory with the prerequisite smarmy grin to boot!!

[PokerTime]

First of all, rent caps are not capping the amount of rent charged, but cap the percentage at which it can be increased year on year.

Social housing rent increases have been capped at between 1-3% above inflation for decades, which is why they have rents more realistically in line with the salaries of those that live in them.

Building homes is a solution and Labour have committed to building 200,000 homes per year for the next five years if they are elected. The conservatives have made no such commitment. But similar promises were made by New Labour and fell well short. It takes times to build homes, and it takes time to find public private partnerships to deliver them (under the current system of financing). But I totally agree with RC that the Conservatives have no interest whatsoever in affordable housing and even less in local authority owned housing. They are completely Victorian in their outlook and attitudes towards the poorest members of society (which includes the low waged).

Loz you are completely wrong on this. 80% of rental property is already paid for and has no mortgage attached. There is no negative loss to the landlord from a rent increase control. The other 20% is also not under threat unless interest rates rise faster than the allowed rent increase. Then we have a problem, but buy-to -let is such a small part of the overall rental market, that to champion the risk to that sector, over the lack of risk to the rest of the sector is a distortion. It is better to target help at buy-to-let investors hit by this policy than to reward all landlords with taxpayers income through top-up benefits, while they continue to raise rents at any level they like.

?28 billion was spent last year in tax credits and HB to families with at least one parent in full time work. That is tax payer?s money subsiding low wages and landlords. The tax credit makes no distinction between the minimum wage of a small business, or the minimum wage of a large corporation. Just as HB makes no distinction between the rent increase of a buy-to-let investor with a mortgage attached, and the 80% of properties with no capital debt attached.

Rent increase controls WILL work in that they will over time allow salaries to catch up and cost the nation less in welfare. Who cares if landlords make less profit in all of that as long as they do still make a profit. Balancing the economy isn?t just about deficit control (as hard as that is to do in an economic system built entirely on credit and debt), it?s also about putting value back in to peoples wages, and away from capital assets.

Another good reason for controls is that it will dis-incentivise fluid income, through changes to the pension lump sum rules, from being invested in buy-to-let and exacerbating the problem. The prediction is that the over 65?s will further push first time buyers out of the market.

A lot of the arguments levied again rent increase controls are the same arguments levied against the introduction of a minimum wage. They are scaremongering, with no basis in reality.

We know what the problems are. The free market is not going to sort them out. There has to be regulation.

Also there needs to be measures to bring empty properties into use as well.

There?s a march on Jan 31st if anyone is interested on the shortage of affordable homes in London.

[Loz]

I suspect you've not actually read the petition, PT!

What you call 'rent caps' is actually rent controls. What the petition wants is rent caps.

[PokerTime]

Ah you are right, I did not read it and thought we were talking about Labour's manifesto promise.

Again, given that no capital debt is attached to 80% of the rental market, a rent control could work, but the figures would have to be regionally set, and an annual inflationary increase allowed. London is unique again in that 52% of households rent, whereas regionally it is only 30%. Of course, the situation is not helped by LA's selling off former council estates for redevelopment, which in reality is displacing the poorest out of London.

I think there are better ways though, to slow the market, and to give wages a chance to catch up.