Bob Young criticises Labour’s idea of rent caps
Bob Young, chief executive officer at Fleet Mortgages, has criticised Labour’s idea of a rent cap.
Both Young Labour and the Momentum Pressure Group have proposed capping rents and speaking at Labour’s Party Conference on Saturday, Shadow Chancellor John McDonnell vowed Labour will do so.
McDonnell said: “We’ll cap rents and build a million new genuinely affordable homes, so young people in particular, aren’t pouring away thousands of pounds from their wages to rip-off landlords.”
Young (pictured) said: “My views on rental caps are well known and therefore I’m somewhat speechless that this is still on the agenda.
“We’ve been here before with caps – the 1974 Rent Act – which provided for a ‘fair rent’ not just a rent cap.
“The artificially-set rent back then – which wrongly assumed an equal number of tenants and landlords in the market – created a real unintended consequence by effectively destroying the private rental sector in that era.
“Rent remains a function of the market we currently have – unfortunately it’s broken because successive governments over the past 40 years haven’t had joined-up thinking on homes, not only the number required but how many could be owned, plus of course where the PRS and critically social housing sits within that.
“Until we get that joined-up thinking and a fully-realised housing strategy that covers all areas, I suspect we’ll continue to have ideas like this peddled and, if it is introduced, I suspect we’ll get the same sort of results as we did before.”
David Cox, chief executive at ARLA Propertymark, added: “Rent controls do not work; it hits hardest those it’s designed to help the most. The last time rent controls existed in this country, the private rented sector (PRS) shrunk to the lowest levels ever recorded.
“At a time of demand for PRS homes massively outstripping supply, rent controls will cause the sector to shrink.
“In turn, this means professional landlords will only take the very best tenants, and the vulnerable and low-income people that rent controls are designed to help, will be forced into the hands of rogue and criminal operators, who may exploit them.”
Other proposals that Labour are set to discuss include giving councils more power to purchase homes that have been empty for six months.
Young added: “I am rather ambivalent about councils’ purchasing homes that have been left vacant, although six months seems like a very short amount of time.
“There will be large numbers of landlords who have seen rental void periods upwards of this on their properties through no fault of their own.
“Plus, what will be the mechanics of a compulsory purchase and who is going to decide the price?
“Will it be a fair market value or will it be determined by a Local Authority?
“It’s another can of worms that could be opened and may well end up in a lot of legal cases being brought.”