Ed Miliband will today pledge to bring back discredited rent controls ¿ despite warnings that the move could worsen Britain's housing crisis
Ed Miliband will today pledge to bring back discredited rent controls – despite warnings that the move could worsen Britain’s housing crisis.
In a dramatic intervention in the free market, the Labour leader will vow to cap rent rises in the private sector and force landlords to offer long-term tenancies.
Mr Miliband will claim new laws are essential to help millions trapped in ‘generation rent’ who are at risk of being ripped off by grasping landlords.
But the move raises the spectre of previous attempts to control private rents, which have led to housing shortages and a decline in the standard of rented property.
It will also reinforce fears that Mr Miliband’s left-of-centre agenda will involve widespread 1970s-style State intervention in markets.
The Labour leader has already announced controversial plans to freeze energy prices and introduce Soviet-style land grabs against developers who fail to build houses.
The populist policies have been branded ‘anti-business’ and led to warnings that they could spark a catastrophic collapse in investment.
Rent controls have long been backed by the Left and are a key demand of the militant Unite union.
But experts warn they have a disastrous history and could worsen Britain’s housing crisis.
In a major report on housing last year, the respected Royal Institute of Chartered Surveyors said: ‘All political parties should make a commitment not to introduce rent controls in the private rented sector, as this would reduce the level of supply in the rented housing market at a time when the country is becoming more dependent upon the sector.’
Rent controls have a chequered history around the world.
Supporters claim they have proved effective in countries such as Germany and Ireland, but they are blamed for the spread of slum dwellings under socialist regimes in Vietnam and Venezuela. They deter landlords from renting out their properties or from maintaining houses that are already rented out, leaving tenants with dilapidated accommodation.
In the UK, rent controls were introduced as a ‘temporary’ measure during the First World War and were only finally abolished by Margaret Thatcher in the 1980s.
Labour last night insisted that its new plans do not amount to the return of traditional rent controls.
Rent controls have long been backed by the Left and are a key demand of the militant Unite union
‘Some landlords will not like this, but millions of tenants will,’ a source said. Mr Miliband will today say intervention in the rented housing market is a key plank in his agenda to tackle Britain’s cost of living ‘crisis’.
Speaking at the launch of Labour’s local and European election campaign he will say the nine million people now living in rented accommodation have been ‘ignored for too long’.
‘The next Labour government will legislate to make three-year tenancies the standard in the British private rented sector to give people who rent the certainty they need,’ he will say.
Under Labour’s plans most tenancy agreements would automatically last for three years. Although landlords would be free to set the rent at the start of the agreement, future rises would be capped by the Government.
This could be based on inflation or the average increase in market rents and could vary in different parts of the country.
There appears to be no provision for dealing with a sudden increase in interest rates, which could leave many landlords unable to raise rents to cover their costs.
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