State control of the private rental market would be a big mistake

We had a very interesting Council meeting last week, which was dominated by debate over the Bright Start Nursery (I have blogged my statement on this below so won’t say anything more at this stage). But it was also particularly interesting in relation to a couple of housing matters.

Firstly, the Green Party and Labour Party united in coalition to support a notice of motion advocating state-control of the private rental market. In my view, this would be pure madness. Rent regulation has been tried before and failed. Economists from all sides of the political spectrum, have criticized rent regulation as economic illiteracy which, despite its good intentions, leads to the creation of less housing, raises prices, and increases urban blight. You can just imagine the stampede of private landlords out of the City if this was introduced – and in Brighton & Hove, which has one of the largest private rented sectors in the country, it would be disastrous for families and individuals who rely upon this type of housing.

In their motion, the Greens claimed that rents in the private sector have gone up so much in recent months that it is effectively pricing tenants out of the market. But what they don’t mention is that for most of 2008 and 2009, rental prices for 2 and 3 bedroom properties fell considerably due to the recession. In addition, if you look at the wider trend since 2001, rent rises have been on average lower than inflation over the same period.

It is also worth pointing out that for private tenants who claim housing benefit (or Local Housing Allowance as it is now called), it is the independent rent assessor who determines the level of benefit they can receive. The Government’s proposed reforms to housing benefit (much criticised by the Greens and Labour) – to effectively cap how much tenants can receive – are partly designed to bear down on private sector rent levels. This is because there is plenty of evidence to suggest that landlords push up their rents for housing benefit tenants because they know it will be covered by the public purse.

I am also slightly puzzled at the Labour Party’s support for the motion. For it was back in 2008 that the then Labour Government commissioned a review into the private rented sector – the ‘Rugg Review’. At no stage did this review consider that capping private sector rents would be advantageous. In fact, they identified the 1988 Housing Act, which lifted rent controls, as one of the main factors in the huge increase in supply of private sector rented properties over recent years. I don’t recall the Labour Group at the time making any representations on rent capping so it is a bit opportunist for them now to be jumping on the bandwagon!

Secondly, I asked our representative on the Sussex Police Authority – Green Party councillor Ben Duncan – what representations he had made on behalf of the residents of the City about squatters and van dwellers, issues which I know cause considerable concern and anger in our communities. His answer was very telling – he said that the Police put too many resources into dealing with these problems and that they should concentrate on other ‘priorities’. In other words, the Green’s position, were they ever to take control of the Council, would be to effectively turn a blind eye to these unlawful activities. Not for the first time (here and here) they have demonstrated a worrying contempt for the basic principles of law and order

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