The Green Party has reiterated its stance that rent controls are an effective solution to the UK’s housing affordability crisis, despite evidence suggesting such measures may have unintended negative consequences. Speaking at the New Economics Foundation, Green Party leader Zach Polanski emphasised the need for rent caps and the abolition of the right-to-buy scheme as part of a broader strategy to support tenants.

Green Party advocates rent controls

In his speech, Zach Polanski highlighted the strain rising rents place on communities and the wider economy. He stated, “Spiralling rents are ripping the heart out of communities across the UK. Renters are being forced to cut back on essentials just to afford the cost of a roof over their heads, and it’s not just individuals who suffer as a result, it’s the entire economy.”

Polanski argued that rent controls have proven successful in other countries, noting that “rent controls are an established part of private renting in 16 European countries and it couldn’t be clearer that the UK’s got some catching up to do.” He suggested that if rents had been frozen in autumn 2022, households across Britain would have saved an average of over £3,300 annually, collectively putting £18 billion back into the pockets of ordinary people. This, he claimed, would boost local economies through increased spending in shops and pubs.

He also criticised the current government for ignoring attempts to introduce rent controls, referencing Green MP Carla Denyer’s efforts to include such measures in the Renters Rights Bill. Polanski concluded, “A Green government would bring in rent controls. We would stop the chokehold of rip-off rents and breathe life back into our communities.”

Concerns over rent controls’ impact

However, the effectiveness of rent controls remains contested. The Institute of Economic Affairs (IEA) warns that while rent caps might initially reduce costs for existing tenants, they often lead to higher rents in sectors not covered by controls and can diminish both the supply and quality of housing.

Scotland’s experience with rent caps illustrates these challenges. Despite the introduction of rent controls, rents there have surged by 11.6%. Data from Hamptons reveals that Scottish landlords are increasing rents faster than anywhere else in Great Britain, a trend attributed to the market distortions caused by rent controls.

David Fell, lead analyst at Hamptons, commented, “The evidence from Scotland suggests that rent controls rarely work as intended. At best, they delay rent increases; at worst, they set a new benchmark where landlords feel compelled to increase their rents every year by the maximum allowed.” He added that uncertainty over future regulations encourages landlords to raise rents incrementally to avoid falling below market levels.

Calls to end right-to-buy scheme

Alongside rent controls, Polanski called for the abolition of the right-to-buy scheme, which has seen over two million council homes sold since its inception. He argued that while initially these homes went to hardworking individuals, many are now owned by private landlords, property developers, and investment firms who treat them as “cash cows.”

He noted, “One in six private renters is now renting a former council home, often at extortionate rates, and often partly paid for by the government in the form of housing benefit.” Polanski highlighted Green MP Sian Berry’s campaign for councils to buy back homes lost through right-to-buy, describing the current system as “not only totally unfair but utterly incoherent.”

He concluded, “We need to end right to buy completely. Build more council homes and control rents so everyone can afford a decent roof over their heads.”

What this means for landlords

The Green Party’s proposals, if implemented, would represent significant changes to the private rental sector. Rent controls could limit landlords’ ability to set market rents, potentially reducing rental income and affecting investment returns. Evidence from Scotland suggests such controls may also encourage landlords to increase rents more frequently within permitted limits, potentially raising costs for tenants over time.

The abolition of right-to-buy and increased council house building could alter the housing market landscape, potentially reducing the number of properties available to private landlords. Landlords may face greater regulatory scrutiny and market uncertainty, emphasising the importance of staying informed and engaged with policy developments.

Source: Based on reporting from Property118

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