Rent caps are good for growth claims Renters’ Reform Coalition

A tenants’ group is calling for rent caps to be introduced, claiming they are “good for growth”.

Writing in LabourList, Renters’ Reform Coalition director Clara Collingwood claimed that “out-of-control” rents were pushing up the cost of Local Housing Allowance and leaving tenants struggling.

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

Out-of-control rents

Ms Collingwood told LabourList: “The Renters’ Reform Coalition (RRC), an alliance of leading national housing charities, think tanks and tenants’ unions, is united in calling for caps on how much landlords can raise the rent by, because we know that the high cost of renting is at the centre of the housing crisis, as well as the cost of living crisis.

“Rent now takes up, on average, 36% of renters’ salaries, meaning that the average rent is officially unaffordable.”

Ms Collingwood pointed to data from a YouGov poll which suggests that 70-78% of the public consistently support capping or restricting rent increases.

She added: “Rent caps are good for growth and keep much-needed money in the pockets of tenants, and in the Treasury. Out-of-control rents are pushing up the cost of Local Housing Allowance, and suck money out of the pockets of renters, a traditionally high-spending demographic, that could be spent in local shops and cafes, supporting our high streets.”

Defend landlords’ interests

Ms Collingwood acknowledges that rent controls face opposition but argues that introducing rent caps could leave voters better off ahead of the next election.

She said: “On the right of politics, the Conservatives and Reform are gearing up to defend landlords’ interests, despite the fact that a majority of their supporters, as with supporters of all parties, are in favour of rent controls.

“It’s also true that the cost of living crisis is complex and outcomes can be hard to predict.

“But by introducing rent caps, Prime Minister Andy Burnham will be giving his government the best shot at making sure voters are better off at the next election.”

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.”