Debate Magazine

I'll Be Presently Surprised If This Gets Past the City AM Moderators.

Posted on the 15 September 2016 by Markwadsworth @Mark_Wadsworth

Kristian Nimitz wheeled out his Faux Lib nonsense for the umpteenth time.
Shooting the messenger: Rent controls have always and everywhere ended in failure
Quite clearly, in the real world they haven't, sometimes yes, usually no, depends on other factors.
My actual comment:
Badly wrong on at least two counts.
The UK had rent controls for most of the 20th century, but that did not mean that housing supply disappeared. All that happened was that landlords left the market - meaning there were more homes for owner-occupiers to buy, who also acquired all new supply.
(In European countries, rent controls coupled with yet another "government interference" i.e. minimum building standards have also led to favourable outcomes.)
This is a large part of the reason why owner-occupation rates doubled in the decades after 1945 and the number of private tenants halved.
Another major reason was that mortgage loans were capped at low income multiples, which set a natural cap on house prices.
His other glaring error is that granting even more planning permission will make no difference, it is pushing a piece of string. Land bankers/home builder have a profit maximising level of output of about 150,000 a year. If more permissions are granted, these are simply banked, which is why the largest home builders are sitting on land banks with planning sufficient for ten years' supply.
If Mr Nimitz left his ivory tower for a few minutes and took the trouble to read the accounts of Barrats, Persimmon et al, this would be obvious to him.
I imagine that the third mechanism adopted by UK governments to put a natural cap on rents and hence house prices will be completely unpalatable to Mr Nimitz. That was the easy availability of low rent social housing, which enabled millions to opt out of the land price Ponzi scheme altogether.

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