Capping rents is not the answer to housing crisis

Capping rents is not the answer to housing crisis

12:24 PM, 1st November 2012, About 11 years ago 1

Text Size

A Press Release issued today by  suggests that addressing the current housing crisis by capping rents will lead to poorer standards of accommodation and a reduction in the supply of properties.

The recent report from the National Housing Federation called “Home Truths”, revealed that years of not building enough homes has led to rising rental and house prices, leaving millions of families struggling to pay the rent. The report also revealed that 417,830 more working people, an 86% increase since 2009, are now reliant on housing benefit to help them pay the rising rents.

In the wake of the report’s publication, many commentators are now calling for a cap on rents to be introduced.

But Graham Kinnear, managing director at Landlord Assist says capping rental prices will have drastic consequences and lead to worsening standards of accommodation.

He says: “We have long been noting that housing demand is seriously outstripping supply as a result of a reduction in the number of homes being built, the reduction of people purchasing property to let, and all this set against increasing numbers of newly formed households choosing to rent before buying, net immigration and single person households.”

“We think that consideration should be given at Government level to support not only housing associations and social housing providers but also private landlords as all these parties can help to address the current housing shortage. If the Government makes it easier for landlords to gain finance this will help to increase the supply of properties and reduce rental costs.”

Kinnear adds: “Capping rents is definitely not the answer to the problem. If a cap is forced on rents then this will lead to sub-standard levels of accommodation and even force some landlords to leave the industry, leading to a reduction in the housing stock at a time when it is needed most.

“Likewise if landlords are unable to increase their rental income they will place more emphasis on reducing void periods and only let to tenants with impeccable finances who are prepared to commit to long-term rentals. This will make it increasingly difficult for people on benefit support to secure tenancies in suitable accommodation.”

With 1.8million households currently on waiting lists for housing, the need for action is obvious. Housing costs have increased by almost 100% over the last decade and yet average salaries have climbed by only a third.

Furthermore there is a need for more accommodation for the elderly as the over 65s represent almost a fifth of the UK population.

Stephen Parry, Commercial Director at Landlord Assist says: “Whilst we advocate that the market should be allowed to operate freely, we feel there is an urgent demand for the Government to provide assistance to landlords to provide more accommodation.

“Critically there is a requirement to improve the availability of finance and a more straightforward planning system with perhaps less onus placed on granting planning permission via Section 106 agreements. If we can encourage landlords and developers to buy more property for the rented sector we should be able to improve the economy and reduce the housing crisis at the same time”


Share This Article



20:20 PM, 1st November 2012, About 11 years ago

Interesting, and I agree with the final paragraph but my experience in Cheltenham is that some flats get more rent from LHA tenants than they would be get with private tenants as the amount payable is an average for the area. This means the higher priced flats have to be topped up by the tenant e.g. from part-time work, OK, but it also means the cheap flats are being overcharged for and the council effectively being ripped off. Perhaps capping the rent will stop this and force rogue landlords into line.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now