Thursday, 30 April 2015

Reader's Letter Of The Day

From The Evening Standard, page 57:

The arguments against rent caps ignore all the hard evidence.

For most of the twentieth century, the UK had quite strict rent controls and better tenant protection. Yes, the result was that rented accommodation was of lower quality - but landlords were no longer outbidding owner-occupiers, keeping a lid on house price inflation.

[This para was edited out: As a result, the number of households renting from private landlords fell from 90 per cent to 10 per cent between 1900 and 1990; and the number of owner-occupier households went up from 10 per cent to 70 per cent. Social housing took up the slack.]

The most worrying statistic is that among the under-35's, owner-occupation levels have fallen from two-thirds to one-third over the past ten years. So reintroducing strict rent caps is a core part of YPP's housing and economic policies.

It is not just about protecting tenants - to borrow some Tory slogans, it is about putting money back into people's pockets and having a property owning democracy.

Mark Wadsworth, Young People's Party PPC for Epping Forest.

In response to the comments, replacing taxes on income with taxes on land is a much better way of doing everything and would sort out most so-called economic problems, but on the narrow issue of high rents/house prices and wealth inequality, a combination of mortgage restrictions and rent caps are a reasonably good second-best way of doing things - they largely solve these narrow issues (but not much else).


Bayard said...

"having a property owning democracy."

Which is what we have now: the property is owned by landlords, who vote Tory. What's not to like (if you are a Tory)?

mombers said...

Not sure if rented accommodation under reinstated rent controls could possibly be of worse quality than some of the crap out there today...

Lola said...

M. Indeed.

As a general principle I abhor encouraging any sort of regulatory bureaucracy - which would grow like a fungus if rent caps were applied. So, question. Would LVT/CI work as well as a rent cap to cap rents? (On the assumption that collecting LVT/Paying CI would not encourage bureaucrats as it is not a rule).

ThomasBHall said...

LVT and CI would not cap rents at all. Rents would continue to rise as the country got richer. Rent caps give lucky existing tenants a (sometimes massive) "discount" on rent- in the same way that not charging LVT gives owner-occupiers a massive "discount". Personally, I think LVT would increase the quality of rented accommodation, as landlords (maybe renamed as something less feudal) would have to compete on the improvements part of the propert rent, as the rest would be collected as LVT- hence anyone who can most efficiently operate a rental business will make the most money, and if no-one likes the service, they go bust like any normal business!

ThomasBHall said...

Separately, a full CI dispersement of LVT collected will net to zero in the average property- so in that case, the zero net charge would stay the same, while improving the take-home CI for those in below average areas. The the above average areas would see reflected real "rent" increases...

Random said...

"LVT and CI would not cap rents at all. "
CI will cover the "rent" on the bottom half of homes.

Ben Jamin' said...

Capped prices the water companies can charge are rent control.

Simple question to ask those against rent controls, shall we allow water companies to charge whatever they like for sewerage services and freshwater?

How much would you pay for the convenience of both?

Without those price caps, stick an extra zero on to the end of everyone's water bill.

Of course, the best option would be free floating water prices and a tax/auction to reduce any monopoly profits to zero.

That way we get maximum efficiency too.

Price caps/rent controls only real failure is the deadweight losses they incur.