Rent Control Measures

Rent Control Measures

Government imposed rent control measures – like the idea or not, they look to be coming our way

Private rents are increasing in most urban locations. Competition often prices out the people most in need of housing. Many local and some national governments are looking to impose rent control measures. Their aim is to try to and improve affordability as well as conditions within the private rented sector.

Whilst there is some resistance to government interference in the market, it is widely accepted that it has become more difficult for people to access affordable housing. The dream of owning a property for many young people has become just that, a dream.

Using Bristol as an example, over the last decade private rents have increased by 52% while wages have only risen by 24%. This has forced many people to move further away from their place of work, family and or support networks.

How might rent control measures manifest? We have a number of examples already in place in the UK:

  • Many would see England’s proposed abolition of “no fault” evictions has effected the ability of landlords to impose rent increases.
  • 35% of residential developments in London being required to have “affordable housing” could also be seen as a quasi- rent control measure.

Elsewhere in Europe most other countries have rent control or rent moderation measures currently in place. A rent control imposed in Berlin recently has been found to be illegal by the federal Constitutional Court. Most of the imposed rules are for high density urban locations where competition is high but the workforce is needed.

An effective program of building affordable homes in the right areas would be of the most benefit. However, it is sometimes the urban areas where development is the hardest to achieve and for the government to have any actual affect on.

The governments recent consultation on the National Planning Policy Framework (NPPF) published before Christmas 2022 removes the mandatory requirement for 300,000 new homes a year.  It also waters down obligations on local planning authorities to deliver new housing. Therefore, government assistance in replenishing housing stock looks unlikely.

A range of rent controls could be utilised many of which are already in place in other countries across Europe from:

  • Rent zones established in specific areas
  • Rent increases capped
  • A cap on the % increase over a specific time (Ireland, Germany)
  • Rent caps set to open market rents at a certain date
  • Rent increased restricted to an index variation (PI, RPI) (Italy, Netherlands, Poland, Portugal, Spain)
  • Rent Tribunals or courts used to agree rent increases when agreement has not been possible (Sweden, Netherlands)

Many people including investors would argue that the rent control systems do not work and that they increase the chance of an alternative sub-letting market. There is some evidence that this does happen.  However, with many sub-standard rental properties in urban areas often going to a sealed bidding process, sometimes without the properties being viewed by the applicants. Therefore, it is clear that something needs to change.

Buy to Let investors are already under pressure with increased regulation, maintenance costs and particularly with mortgage rates on the rise.  Further controls will undoubtedly put many investors off this sector. They might even force a return of many properties back into circulation for buyers.  Is this a bad thing in the long term?

There are currently approximately 134,000 people renting privately in Bristol, which represents almost one-third of the population. With three nearly grown-up children of our own, who will be in the rental market for a time trying to save for a deposit of 30%+ they will be unsure of what the future holds.

In the future the chance of rent controls being introduced are, in our opinion, very likely. Bristol City Council recently voted mainly in support of rent control measures. It looks like we will have to wait and see.

For more articles like this, go to our Articles page.

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