Over the years there have been discussions on using rent control to make private sector housing in the UK more affordable. The Labour party, led by Jeremy Corbyn, is once again considering using this form of price control if/when they are in power. So how would this type of scheme benefit the low income, poor, or vulnerable?
While the details would still need to be worked out, the plan would limit the amount of annual rental increase that a landlord could implement each month. This will allow families to plan out what they will need to pay each year, so they could budget properly. In addition, with the lack of housing to let across the UK, it will help ensure the lack of supply does not continue to make housing unaffordable for low income as well as people with moderate incomes.
The cap from the Labour party would most likely be an issue for property owners though. Many landlords are buying properties as well as letting a home as a business. They have expenses they need to pay, such as a mortgage on the home, repairs to the property, and more. If they are not allowed to make an income off their investment, a landlord may not invest in building new housing in the future. This will then just make the housing shortage much worse.
A local council would more than likely set the limits of the annual increase. This will factor in the city, area, or borough of the UK. So housing in London will be more expensive than in smaller cities or villages in the UK. The price could be flexible, such as limits per bedroom or amounts per square metre. Or the local authorities can come up with their own means on what that monthly amount should be.
In addition to that, a 3 year tenancy agreement would be the norm. This will lock in the terms and conditions between the landlord and tenant. It will allow the tenant to know how much they will need to pay for their housing, what happens with any damages or arrears, addresses safety matters, and everything else that is in the agreement.
Knowing the amount of outgoing bills on a monthly basis is critical to budgeting. It helps not only families living in poverty, but also anyone who is renting a property; either social or private sector housing. The renter will know how much income they need to have, can work with Citizens Advice or another organisation on creating a budget, and take other steps on their financial future.
Price controls have their pros and cons. The issue has been brought up over the years by the Labour party as well as charities such as Shelter. It is one possible solution, and when combined with social housing, may benefit the vulnerable and poor. While there is no definite answer on whether it would be good or bad for the UK, the fact is that rental prices are out of control in the private sector. The scheme should be worthy of a hard look from the government.