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By Graham Norwood

Editor, EAT, LAT & LLT

Graham Awards


Rent Controls - It’s Back To The Future

Few political policies have such a ring of the past as rent controls - they were last seen in this country in a time when ‘controls’ were widespread, from wage rises to imports, from the amount of money you could take on holiday to limits on price increases in shops.

They are now pledged to be reintroduced in Scotland, thanks to a new ‘compact’ made between the SNP and Green parties to ensure a majority in the Scottish Parliament.

Details are thin on the ground but the noises from that country’s new Minister for Tenants’ Rights suggest the measures he has in mind have more than a few echoes of the past.


Rent control was first introduced into the UK during World War One under the Increase of Rent and Mortgage Interest (War Restrictions) Act 1915 - basically a panic move to prevent profiteering during the war, when some 90 per cent of households privately rented.

In fact the measure existed long beyond the Great War, falling away finally only in the 1930s - and just a few years before The Rent and Mortgage Interest Restrictions Act 1939 was introduced in order to (you guessed it) prevent profiteering during World War Two. After 1945 a flurry of laws introduced rent tribunals and varied measures like local rent caps.

What is interesting is that during this first four decades of rent controls, the issue appeared non-partisan - all three major parties of the time in the UK were broadly in agreement, and the issue did not become politically partisan until the 1950s.

Then Labour expressed rent controls as part of a planned economy, and some Conservatives felt the absence of such controls were symbolic of what they saw as a free economy.

The House of Commons library describes the period between the end of WW2 and the arrival of the Thatcher government in 1979 this way: “Efforts were made to stimulate the private rented sector by restricting rent control through the Rent Act 1957, which allowed previously controlled rents to be based instead on gross property values.

“The Rent Act 1965 introduced regulated tenancies with ‘fair rents’ set by independent rent officers and, ultimately, the Housing Act 1988 deregulated rents on new private sector lettings after January 1989.”

In other words, rent controls - sometimes vigorously policed, sometimes not at all - were synonymous with a decline in the size and influence of the private rental sector: that 90 per cent of households renting at the end of WW1 had become just 10 per cent in 1989.

“Rent control has been widely identified as a factor in this decline; it is argued that there is a direct correlation between reduced rental returns and reduced investment in the sector” says the Commons Library history of rent controls - although it notes also that the popularity of alternative investments and the growth of the mortgage sector meant privately renting was inevitably taking second place to the increasing owner occupation sector.

Then came Margaret Thatcher. As with so many other parts of the economy, her government sought to liberalise private renting.

Crucial to this was the Housing Act 1988, introducing the Assured Shorthold Tenancy and heralding the rise and rise of buy to let - a whole infrastructure of interest free mortgages, tax incentives and power-shifts from tenants to landlords happened in the following years.

Since 2010 in particular, the pendulum has swung the other way: it is often overlooked, but is perhaps critically important, that in 2010 the Conservatives took office and have been there ever since, presiding over this transition in power from landlords towards tenants.

That such a slew of anti-BTL, pro-tenant moves have happened in the past decade - phasing out tax incentives, introducing a stamp duty surcharge, and the social demonising of letting a home - shows that once again, parties are converging ‘against’ landlords.

Little wonder, perhaps, that politicians are flirting with the idea of rent controls again, with all bets off as to what the forthcoming Rental Sector White Paper will contain.

Why are diverse political parties seemingly in agreement now? Put bluntly, it suits them and shifts the blame away from politicians for failing to boost house building volumes.

Labour and the Greens take a short term approach, tinged with envy perhaps, meaning it’s easier to make property investors pay more tax, or sell up, rather than actually ensure more new homes are built, which is surely the only real way to ease the housing crisis.

The Conservatives take a different and no better approach: it’s their political paymasters in the boardrooms of the volume house builders who profit from escalating new build prices and fat incentives like Help To Buy, as they control supply to ensure demand isn’t met.

And who gets squeezed in the middle of all this? Landlords and tenants.

As both groups are victims of party political indifference to the housing shortage they have, perhaps, more in common than they would like to admit.

Editor of Estate Agent Today, Letting Agent Today and Landlord Today, Graham can be found tweeting about all things property at @PropertyJourn

  • Matthew Payne

    No more than simply a game of political upmanship to win votes without anyone looking at the facts. For example, rents in London 2015-20 have in real terms fallen by 9.6%, you have to factor inflation into the conversation when looking at rent levels and few do. IF (and its a big if) tenants understood the market better and realised this, there wouldn't be a single one of them supporting this policy, nor others who get sucked into the fake news about rents spiralling out of control all of the time. In established markets, in real terms, London rents are no higher than they were 10 years ago, and this will be mirrored in many parts of the country.

    If you cap rent increases at RPI as is rumoured, every landlord will insist on an RPI increase every year forcing rents up, whereas now a great many do not and let the market dictate the level. Supply would also drop as landlords got out, which when the PRS is already shrinking would add pressure on rents and exacerbate the current social housing crisis. Turkeys and Christmas springs to mind as with the Tenant Fees Act which spectacularly backfired on tenants; the politicians should stop meddling in markets they don’t understand.


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