Labour's timid ideas about modest rent controls/tenant protection have provoked the usual Homey backlash.
Top of the list of counter-arguments is the missing homes conundrum:
Labour was accused on Wednesday night of attempting to introduce rent controls like those blamed for damaging the property sector during the 1960s and 1970s.
The Conservatives said the policy had been tried unsuccessfully by Socialist governments in Venezuela and Vietnam, and would result in low quality accommodation and fewer homes being rented out.
What damage to the 'property sector'? We were building a lot more houses than now and a lot of people were buying them for affordable amounts. Rent controls simply made housing more attractive to owner-occupiers than to landlords, which is why the number of households renting privately fell from 90% to 10% between 1900 and 1990.
Unlike the author of The Telegraph article above, the Tory housing minister couldn't even be bothered to look up rent controls on Wikipedia comes out with this:
Conservative housing minister Brandon Lewis dismissed the plans, claiming only building more homes would lead to affordable rents. 'Rent controls never work - they force up rents and destroy investment in housing leading to fewer homes to rent and poorer quality accommodation,' he said.
For sure, the quality of rented accommodation might go down, but so what?
People are happy to put up with a few years of slumming it when they leave home, get their first job, go to Uni etc. What's really important here is reversing the decline in owner-occupation rates. Among the 24-35 age group, owner-occupation rates have collapsed from a two-thirds fifteen years ago to only one-third today.
To round this off, more bollocks from the end of the first article:
Grant Shapps, the Tory Party chairman, said: “Evidence from Britain and around the world conclusively demonstrates that rent controls lead to poorer quality accommodation, fewer homes being rented and ultimately higher rents – hurting those most in need.”
He is just making this up as he goes along. There is no real life evidence for any of this. We could present counter-evidence from Germany, which does have implicit and explicit rent controls and much better quality housing.
Sam Bowman of the Adam Smith Institute said: "Rent control is a stunningly bad idea that could devastate Britain’s cities and clobber renters. To paraphrase the socialist economist Assar Lindbeck: the only thing worse for cities than rent control is bombing them."
Rent controls do not 'clobber renters', they turn them into owner-occupiers, which I thought we all agreed was A Good Thing? Further, cities recover surprisingly quickly after being bombed or struck by an earthquake, provided the economic conditions are right. Even by his own admission, rent controls have a lot less impact than that.
Simon Walker, Director General of the Institute of Directors, said: "Basic economics tells us that if you artificially hold down the price of something, you get less of it in the market. This is as true for housing as it is for anything else. At a time when we appreciate there is a housing shortage, this policy is particularly short-sighted."
"Basic economics" tells us that there will indeed be less to rent, but the amount of housing is fixed, and there is no shortage in an absolute sense, so when landlords try to sell up, prices will fall to a level which former tenants can afford. Sorted.
(Obviously, shifting to LVT would sort this out much better, but that's not under discussion here).
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