Labour MP urges government to consider rent controls amid rising rents

A Labour MP is calling on the government to introduce rent controls to curb welfare spending.

Margaret Mullane, MP for Dagenham and Rainham, writes in LabourList that rent controls are needed to tackle soaring rents.

However, industry experts warn that rent controls do more harm than good.

Driving councils to brink of collapse

Ms Mullane writes in LabourList: “As well as the financial impact high rent is having on families who are struggling, high private sector rents are also having a massive impact on the nation’s welfare budget and driving so many councils to the brink of collapse.

“The Housing Benefit bill has ballooned to well over £30 billion a year, with the majority of this going to private landlords. In addition to this sum, a further £3 billion is paid by local authorities on top of the HB payments.

“Given the focus that exists on curbing welfare spending as well as seeking ways to ease the cost of living, now is the time to look again at rent controls.”

Ms Mullane claims rent controls “are not a radical idea” and arguments against rent controls are short-term.

Arguments against rent controls are short-term

She adds: “Whilst I understand the arguments against rent controls, one being the theory that it would result in the mass sale of property, flooding the market and leading to a crash in house prices, I think this is short-termism.

“Many of our European neighbours have rent control systems. It isn’t a radical idea. France, Germany and Ireland have limitations on rent increases in areas experiencing a tight housing market. Ireland refers to these as ‘rent pressure zones’. I believe a similar model could be trialled in the UK at a local authority level in areas with significant social and economic pressures.

“However, as important as I think rent controls would be, to really get to grips with the chronic dysfunctional nature of housing demand and supply, a major increase in the stock of social rented homes must form the foundation of any strategy to tackle the housing and cost of living crises.”

Rent controls do more harm than good

However, as previously reported by Property118, rent controls do more harm than good.

According to the Institute of Economic Affairs (IEA), while rent controls may initially lower rents for existing tenants, they typically lead to higher rents in uncontrolled sectors and reduce housing supply and quality.

Even in Scotland, the rent cap has been blamed for soaring rents, which have increased by 11.6%.

Data by Hamptons reveals Scottish landlords are increasing rents at a faster pace than anywhere else in Great Britain because of rent controls reshaping the market.

Lead analyst at Hamptons, David Fell, said: “The evidence from Scotland suggests that rent controls rarely work as intended.

“At best, they delay rent increases; at worst, they set a new benchmark where landlords feel compelled to increase their rents every year by the maximum allowed.

“Faced with uncertainty over future rules, many landlords choose to raise rents little and often rather than risk falling far below market levels.”