Rent controls

THE rental market has been a topic of discussion lately with major changes planned which will affect both tenants and landlords.

The biggest change being the abolishment of letting agent fees which is still to be implemented but has no confirmed date as of yet.

Another issue which was raised recently by Jeremy Corbyn, the leader of the Labour party, was the discussion of rent controls.

A rent control is a cap on the amount of rent that can be charged for a property in a particular location, ultimately adding a “ceiling level” to rental properties.

The Labour leader also believes that each city should have the ability and power to set its own levels.

This would appear to be very favourable to renters who would end up paying a “fair” rent which would be determined by the authorities.

Others argue that it would affect the overall rental market as it would potentially be less profitable to invest in property and some may even sell their properties, thus lessening the number of available rental properties.

Some cities in Europe already have rent controls in place such as Paris and Berlin.

Germany’s capital has had this legislation in place for over two years and both the sales and rental market appear to be prosperous still but competition over each apartment is exceptionally high which can leave renters struggling to find a suitable home.

Rental figures in Britain have risen over recent years with an increase of 3.4 per cent between September 2016-17 in the South West (Homelet, 2017).

This ongoing increase may be the reason why rent controls have been a topic of discussion.

Rent controls were previously used in the UK for seven decades from the First World War and it was reported that at the start of this time 90 per cent of the housing market was made up from private rented housing which decreased to only 10 per cent by the time it was removed in 1988 (The Guardian, 2017).

It was generally considered that rent controls and regulated tenancies made the rental market an unviable option for investors.

Berlin and Paris do not seem to be suffering yet from the same decline in the rental market due to rent control implementation but demand still outstrips supply.

The problem will occur if landlords become too controlled and they decide to find an alternative investment.

In April 2013, mortgage interest, average earnings and private rents were all around the same level.

By April 2017, average earnings and private rents had steadily risen at the same rate whilst mortgage interest was at record lows.

Renting has now become more expensive than some mortgage repayments, however, interest rates are expected to rise which may narrow the gap.

There will always be a strong demand for rental properties as people become more transient.

During the average person’s working life, they may now need to change employers and careers several times, which often requires a move at short notice.

We are becoming much more in line with Europe who have, for a number of years, had a larger rental sector than the UK.

It is hoped that too much control will not reduce people’s choice.

With an ever-changing rental market, being kept up to date and on top of how these changes may or may not affect you is where we come in.

Landlords, tenants, vendors or buyers, we are here to guide and assist you in anything property related.

We, at Bennett Jones Partnership, have an experienced sales and lettings team at hand to ensure that you have the best help and service available and we look forward to hearing from you in the near future.