Is rent control an option to resolve the current housing crisis in the UK? Of late, there has been a debate, especially among tenants, about the benefits of reintroducing rent control.
According to the findings of a poll conducted by market survey agency ‘Survation’ 59% of the respondents are in favour of reintroducing rent control while a mere 7% opposed it.
So, based on these findings and perhaps those of other similar studies, should the government go ahead and reintroduce rent control to curb the exorbitant rents landlords are levying on tenants, especially in London?
The answer is ‘No’ as the reintroduction of rent control can backfire, creating more ripples in the already troubled UK property market where demand for housing – to own and rent – is already very high owing to several factors (extremely steep prices being the primary one) and there isn’t a corresponding increase in the number of rental units available.
A closer look at the London market reveals that several enterprising homeowners have converted their vacant bedrooms and basement into rental accommodation to bring in additional income.
While they fall into a different category from buy-to-let landlords (those investing in property with strong rental potential), these landlords nonetheless narrow the rapidly increasing gap between demand and supply of housing to a large extent. Introducing rent control measures could prompt them to remove their homes from the rental market, thereby further impacting the housing situation.
Additionally, in a free market economy, rent control may appear archaic when compared to other global cities. There is no doubt rents (particularly in London where working professionals pay upto 50% of their earnings for monthly rentals) have spiraled out of control and the need to regulate the abnormal growth of rent is evident. However, the government needs to look beyond rent control and plan from the long-term perspective to make housing affordable to all through policy intervention.
If you’re looking for property development opportunities in the capital, contact us. We’d be happy to discuss several lucrative projects with excellent long-term rental potential and showcase some of the new homes we’ve recently designed (see photo above).