The party politics of rent controls: a digest

05/01/2015

The spectre of rent controls, that made a notable appearance at the beginning of last summer, has reemerged. A new set of surveys by polling firm Survation as produced some interesting impressions of cross-party support. So where are we?

By those with property wealth and their right wing allies they’re often dismissed as an angry, knee-jerk policy response of the communistically-inclined. It rubs hard against the grain of a liberal, property-owning democracy they tell us. Yet, large American cities like New York, Los Angeles and Boston employ rent control policies. Yes indeed, in the United States – that bastion of experimental left wing policy-making silliness. Whether rent controls are virtuous or not is not really the point, the polling published last week by Survation has demonstrated a ground swell of support for some sort of rent controls to be brought in. If the building of new houses, and the right sort of housing, is happening too slowly (if at all), then why not?

Here’s what the parties say:

Labour

Cap rent increases in the private sector and scrap letting fees. This is not the same as rent controls per se apparently, and Labour are against rent controls proper. Some front benchers, like Emma Reynolds, have gone on record opposing them. Expecting Labour to get more radical on this is not a realistic expectation.

Conservatives

Don’t even think about it.

Liberals

Against. Like it matters.

Greens

“Tackling rising rents without rent controls is like tackling poverty pay without the minimum wage”. The Green cheerleader on this issue is London Assembly member Darren Johnson. The Greens passed a motion in 2013 formally supporting a rent control policy.

Many economists really hate the idea of rent controls. Even those, like Paul Krugman, that some on the left might like. Most arguments against are directed mostly towards what happens to rents outside the controlled areas. There 4 main options: Maximum rent rules; Tenancy rent control; Rent freeze systems and Split systems.

Germany France and Spain, report Shelter, have a system whereby rent increases are linked to inflation, indirectly controlling rent rises. Given that this is price inflation based this probably won’t help us here much in the UK, and London especially. It would perhaps make sense to link this to wage inflation, to which there has been very little inflation in recent years. It is this link between wages and the ‘cost of living’ that is the point. Shelter however favour this continental option, but it would be interesting to see how they address this inflation issue (prices or wages?).

But public opinion is clearly very open to the idea if this Survation survey is anything to go by. Most people however are not economists (thank god). Many would also like a four day week and a subsidised ice cream allowance. To be less trivial, many would also like the return of the death penalty! But rent controls have been made to work in many places. Any new house building will take time to take shape. Solutions now, however temporary, are needed. People want a solution and we’ve been doing nothing far too long.

Anyway, here’s a quick digest of the press coverage from last week and last year. We’ve included the Daily Telegraph’s view for s**ts n’ giggles.