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From the Guardian: Jeremy Corbyn is right: we need rent controls, and we need them now
It was great to hear the Labour leader rally to the cause of tenants. For too long we have been at the mercy of greedy landlords and the agents who facilitate them.For tenants, Jeremy Corbyn’s conference speech was joy unconfined. The part where he promised rent controls might have been scant on meticulous detail, but was greeted with loud whooping (in my house at least). Rent controls would have been of great help to me when my flat was sold out from underneath me last year, and the new owner agreed to let me stay – provided I paid a huge increase.Despite a rise of £150 a month, he made no improvements and even ignored my requests for repairs. He did it because he could. He did it because villainous letting agents encourage owners to do so, insisting on “market rents”, which they alone seem to set, and which are often much higher than levels of frozen local housing allowance, and devised without inspecting the property (my own rentier has never seen the flat and lives in another city, so it’s no surprise he relied on the agent’s viewpoint).
Learn Change and Adapt ?????
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The whole system is in shambles
LL`s and tenants are victims of non joined up policies by politicians
If s24 means 150 extra tax then the obvious remedy for a LL is 150 extra rent to pay for it
If LHA is frozen then the obvious remedy for a LL is not to take LHA only private
This is why 12 sec 21`s are landing on the council desk each and every day
The council then ring me up desperate to house their homeless
Ive been doing that for years anyway but now its fever pitched so they offer financial incentives
They are greedy for me to be greedy
Its a vicious circle and I cant see a solution to suit all
If rent controls come in the black market will thrive so that`s not good
Councils offering me 3K up front to take a homeless tenant is in effect a bribe
A working tenant offering me 3K in a brown envelope to take them is in effect a bribe
The free market without effective monitoring and regulation will find a way to circumvent policy
If alcohol was discovered today it would be banned .
Some problems are just too big though for the human brain to solve
I hope housing our people isnt one of them .
At least its getting more air time now which can only be good
Jonathan Clarke. http://www.buytoletmk.com
Councils are not the problem JC they can see the same issues as us ??
Central Govt is the issue
after Britexit The Tories will have a change of leadership and a manifesto will follow
and I see the Tories stealing the Labour parties cloths on this topic
and who ever comes to power with in 5 years we will have further Taxes too
My Guess removal of all interest from landlords be it In a company or in personal ownership
BTL with leverage could be over within 7 years
``Councils are not the problem JC they can see the same issues as us ??
Central Govt is the issue``
You are right to a certain extent . But they are most certainly part of the problem
I feel sorry for them but they are often rude and uncompromising
With a few notable exceptions they just are not blessed with good interpersonal skills -
They still have a good degree of local autonomy but they can easily exacerbate a problem not solve it
Some councils are far better than others . Some councils create problems on top of problems
They make a bad situation worse
And as puppets of the government I`m afraid they are my day to day whipping boy ( or girl)
after 2015 I saw the issues with LHA/UC and I just don't take that sector of customers
I don't intend to spend my days on the phone chasing council departments
I don't need LHA/UC the result is I have a lot less hassle and stress
I can, as ever, pick multiple holes in the Guardian article. What utter tripe. I can’t believe people still read it.
I’m not overly scared of rent controls, depending on how they are enacted of course, nor longer tenancies as my rents are both cheap and my tenancies long already. I can even survive a removal of interest relief. But these buffoons are clearly out to make private renting from small landlords illegal. If they go the same way with ltd co landlords, then I’m out.
Oh it’s all part of the plan to get us out of the market it could be finished within seven years
The article is right in one way, Labour has gained traction on its rent control policies. As its been adopted by the Conservative Government.
Though Labour do plan on going further, to give Mayors or Local Councils the ability to set Rent Caps in certain areas. This does not work as I wrote in 2013 for many reasons - Rent Control is bad for the UK.
Rent Cap's do not work, they halt new landlords entering and other landlords exit; to make better returns in other markets. This means supply will decrease for those needing or wanting to rent a property. In effect increasing the "market rent" but the cap remains as low.
As for Germany; the legislation tenants pay for renovations. The evidence shows in Munich and Berlin specifically that rents are up to the Legal Maximum and increasing by 20% which is the maximum every 3 years. Since 2007, Berlin rents have risen by 35 percent not including new apartments which are excluded from rent controls.
The Rand Corporation studied Los Angeles’ rent control law and found that 63 percent of the benefit of lowered rents was offset by a loss in available housing related to deterioration and disinvestment.
In 1992, over 93% of economists agreed that “a ceiling on rents reduces the quality and quantity of housing available.” In 1988, over 95% of Canadian economists polled reached the same conclusion.
Economists from differing sides of the political spectrum, such as Paul Krugman and Thomas Sowell have criticized rent regulation as poor economics which, despite its good intentions, leads to the creation of less housing, raises prices, and increases urban blight.
A survey of articles on EconLit regarding rent control finds that economists consistently and predominantly agree that rent control does more harm than good.
A study of rent control in New York City in the late 80s estimated reduction in taxable assessed property values attributable to rent control at approximately $4 billion, which costs the city approximately $370 million per year in property tax revenues.
Vietnam Foreign Minister Nguyen Co Thach - 1989 :"The Americans couldn’t destroy Hanoi, but we have destroyed our city by very low rents. We realized it was stupid and that we must change policy"
Socialist Swedish economist Assar Lindbeck " In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing it "
Following WW2 the incoming Labour government established tribunals to set fixed maximum rents for furnished dwellings, making it illegal to charge more. The result of this well-intended wrongheadedness was that most landlords sold up while the rest became villains .Between then and 1977, frustrated landlords began shedding rented properties again after Government policies made the price of maintaining a property exceed rental costs. By 1980, when Margaret Thatcher created new, unregulated tenancies, private renting in this country was too broken to be fixed piecemeal.
Decent landlords would throw in the towel, reducing rental supply even further, while serious investors will turn their backs on a hostile and unreliable environment.
Shelter sums it up well "Historic and international evidence [suggesting] that the side-effects can be pretty undesirable".
_________________________________________________________________________My posts are not financial advice, just a rambling guy passing time on a coffee break.The team at Bespoke Finance offers advice, including Limited Company Buy-to-Let , HMO Conversion and Cheap Life Insurance._________________________________________________________________________
Following WW2 the incoming Labour government established tribunals to set fixed maximum rents for furnished dwellings, making it illegal to charge more.
No. They did not relax controls like that. At the start of the war the conservative government extended the existing system of controlled tenancies to almost all properties. That froze all rents (except where improvements were made) and granted security of tenure with rights of succession. This system had been introduced as a temporary measure in WW1 and had been partially releaxed, e.g. before 1939 it hadn't applied to houses built after 1919. Apart from a 15% allowance for inflation some rents were srill fixed at the 194 levels.
After the war Labour maintained this system, the Conservatives relaxed it (excluding higher value properties). Rachman exploited it by buying buildings with multiple tenants, persuading or focing them to leave, then reorganising the builfimg so that each rooom counted as a new property to rent so got a new rent.
In the 60s Labour reformed this to a system that was better for landlords (not good but better than what proceeded it). This was the regulated tenancy where one rise ebery 3 years was allowed and rises were limited to "fair" rents. A fair rent was based on the market rent, but since there wasn't a working market the rent officer basically had to guess and systematically guessed low. In the 1990s when a market started to work, then under the same rules "fair" rents started to shoot up, so Tony Blair brought in rules restricting such rises.
Actually the Americans could have destroyed Hanoi anytime they wanted to.
They chose not to but did bomb Hanoi to force the North Vietnames to the Paris Peace Talks.
This resulted in the war ending.
But is says a lot when a Communist recognises rent controls are not good for the wellbeing of their capital city.
Perhaps the Labour Party should consider the wisdom of what are supposed to be their erstwhile colleagues from the international socialist brotherhood!!!!??
With cash rent controls can easily be evaded.
They are akin to Prohibition which directly led to the rise of the Mafia who still exert a massive influence on public life in the US.
Plus everyone ignored Prohibition.
The same with rent controls.
Where supply is restricted cash will always beat Govt rent controls.
HMRC would see a massive reduction in tax revenues from the PRS as everyone seemed to be sticking to the controlled rents!!!
So lets look at what happens in the example...
Clearly the rent was at least £150 below market rate, firstly with rent control will landlords allow this to happen, given they would be limited to any rises if the government added any sort of extra costs to landlords it would be safer and more likely that rents would closer follow, so for a start it would be unlikely they would have been saving £150 a month for the last how ever many years... But lets assume this scenario does happen, the current landlord would find it hard to find any buyers as the figures would not work out, thus the tenants would be evicted and have to go and pay market rates anyway...
Personally I think rent controls from a landlords point of view could be a good thing, as the norm will become rent rises to the maximum rent controlled allowed, it could drive up rates and tenants would not benefit from landlords who are happy to leave rents where they are for years.