Should we have rent controls?

[Takver]

Full disclosure here first - I own a rental property with DH, we're small business owners & its part of our savings plan for retirement.

I totally agree that the Housing benefit bill is out of control. There doesn't seem a cats chance in hell that there is going to be mass building or buying of social housing (whether HAs or council houses). So most people who don't own their own house are going to be living in private rental properties.

This means that most housing benefit paid goes to private landlords. We're also in a high house price/high rent spiral where people can't afford to buy, so there's lots of upward pressure on rents.

Planning laws (which I largely support) mean that we already don't have anything resembling a free market in housing / house building. So might the least-worst situation be rent controls?

I'd envisage a fairly simple broad sweep control whereby a maximum rent is set for a local authority area of £X per month for a 2 bed property, £Y per month for 3 bed etc.

Then say a 'rent review' body where landlords could appeal (at their cost) to argue that there is some reason why their particular property should be exempted from the maximum, eg if it is a luxury flat. That body could then give the go-ahead for eg a rent of 10% over maximum for that property.

Come and flame me one and all :)

AArgh - niceguy - could you please read to the end of my posts??!

You said:

"Bread, you assume that tenants are only tenants because they cannot afford to buy because landlords have scooped up all the houses.

It's much more complex than that. Many people rent because they need to be flexible. Many because they simply cannot afford it.

So if you cannot afford to buy your own place and are left on housing benefit and stuck renting, how do you suddenly go get a mortgage to buy the house then? "

I said, in my previous post:

"All this would have the effect of increasing the amount of property for sale, hence reducing prices. Which for unwilling tenants - which is 56% of them, acc to a survey I recently read - means the very welcome opportunity to buy their own homes instead.

The remaining 44% can continue to rent from the smaller selection of rental properties. "

So the answer to your point is that the 44% would continue to rent,same as before. But the reduction in rented housing available wouldn't put them at a disadvantage, because it wuld match the reduction in tenants, as the 56% buy instead.

in my area most HB tenants are renting places which are more expensive then the maximum LHA for that type of property.

This is as the LHA rate is based on the lowest 25% of the rental market, however all of that 25% is not available to HB tenants as many landlords cant/wont take tenants on hb, therefore people are forced to pay higher rents.

I would also say there is already a two tier system. WHen you walk in to a house you can see who was so desperate they would take any shithole house that the landlord was prepared to accept HB, whereas for the same price, someone not on HB would get a much better property.

And there is no shortage of tenants. It takes months to find a property even if you are not claiming HB.

I don't believe it is wise to separate the price of rents from the value of property by any artificial means. The best this will achieve is the widespread destruction of the private rental market; at worst it will bankrupt a large proportion of landlords through no fault of their own. For this reason, any change needs to be gradual with rent yields bearing at least a passing reference to house prices / mortgage repayments.

The crux of the problem is that we don't have enough land to build on. Consider this, where I live in rural Hampshire, an acre of land can be bought for as little as £10k. Unfortunately, you cannot build on this land as it is for agricultural use only. An acre of land, with planning permission to build on, will typically cost up to half a million quid - maybe more - depending upon location. The value of the land depends entirely on the status of its planning application.

It may be possible to deflate the housing market gently by changing the planning rules to allow a gradual increase in the area of land available to build on. No doubt this would be controversial and there would be a lot of NIMBYism to deal with, but if the government took the long view on this - say 25 years or so - we could get back to a realistic value of our houses without too much disruption.

BTW - The cost of building a house (buying bricks, employing builders, plasterers and sparkies etc) is a fraction of the cost of the land - therefore the cost of rebuilding a house is nowhere close to the value of the house.

We have to be careful about building on lots of farmland. Being able to feed ourselves in a world with a growing population we may or may not be able to feed, is part of national security.

Judgey
but you know and I know that the developers own huge chunks of Hampshire - with outline permission - but if they built on the whole lot at once, the premium they charge on the houses over and above build cost would collapse.

And anybody who disputes the size of the premium should look on the developers websites and compare how much they charge for identical houses in different parts of the country ....

www.taylorwimpey.co.uk/newhomes/southern+counties/taylorwimpeyatabbotswood/newhomesforsale/
www.taylorwimpey.co.uk/newhomes/north+east/moorcroft/newhomesforsale/

i agree talking - the recent changes to free up the planning process were bullshit & for party doners. if developers built on their current land banks, demand would be met.

but then prices would drop & they would not make such high profits. Private Eye did a good investigation of this.

I think rent control is probably needed. Our landlord didnt put our rent up at renewal last year, which we thought was fair as we had experienced several problems including the dreaded damp. This year he wants to put the rent up 25%.

He probably could get that (in our opinion he would need to renovate to do so). The reason rent has gone up here is because we are outer London and people are moving out of more central areas due to housing benefit caps.

We dont get housing benefit so just have to suck up the additional cost

I agree that we should be cautious about building on large amounts of farmland. It would be good to look at empty houses/brownfield sites/making it easier for people to downsize first.

Here is a brownfield site that has lain empty for over 20 years.
Application TVS.00515/43 www.testvalley.gov.uk/resident/planningandbuildingcontrol/view-planning-applications-online/ (the map shows the scale of it)
But as the owners are not taxed in any way on it, they have instead
built Abbotswood that I linked to above
leaving derelict land in the centre of the town and covering up fields.

Its time to tax land that has outline planning and stop renewals of planning - make the land worthless again and block it for development, or build on it ....

TalkinPeace2 "It?s time to tax land that has outline planning and stop renewals of planning - make the land worthless again and block it for development, or build on it ...."

This is a good idea in theory but I don't think it's the magic bullet by a long shot. The planning system runs so slow that from buying a piece of land (with planning permission) to laying the foundations can and does take years - especially if there is a change of use, scientific surveys, archaeological digs, environmental impact studies and perhaps even 'area of outstanding natural beauty' regulations to be agreed and adhered to along the way.

From buying the land to selling the first house on it can, and regularly does, take between 6 and even 8 years. No one could fairly accuse the speculators of 'sitting' on that land when it is the lethargy of local government and red tape that is holding them up. Furthermore, if these speculators are only interested in profits one would expect to have seen a glut of properties coming to market immediately prior to the start of the recession but as I recall, the supply of new homes was fairly linear.

I'm not saying that every scrap of land faces these issues and some could be built on in all probability, but it isn't as straightforward as 'all speculators are EEEEEEEVVVVIIIILLLLLL' either.

Judgey
The developers are sitting on 400,000 plots of land that already have outline planning permission.
Its not the local authorities and the planning rules holding them up (I read planning minutes as part of my work)
Its the fact that they would reduce the value of what they do build if they built more.
That and they do not like coughing up for s106 agreements and affordable homes.
I accept that from purchase to sale can take years
but the site in Romsey - look it up on Google maps - has had no activity at all for years and years.
If from permission to starting work is more than 3 years then the scheme is not viable and should be forfeited.

And AONB issues (like those around Winchester) would not be an issue if they would get on and use the brownfield sites first.

Yet another issue distorting the housing market :
Buy an empty house and refurbish it to bring it back into use : incur VAT at 20% on top of the bill.
Buy a farmers and build a house on it : no VAT due on the whole of the build cost.

Don't get me going on the vagaries and double standards of our wonderful taxation system!

Agree the VAT thing is mad.

The problem really is that - in the same way we don't have an industrial policy as a country - we don't have a housing policy either.

The distinction between brownfield and farmland sites is not very meaningful any more, though. Thanks to industrial farming, a brownfield post-industrial site that has run wild for ten years will often be much more beautiful and biodiverse than a field of oilseed rape...

MooncupGoddess I hadn't even thought of it that way but you are absolutely correct.

we have policies for major developers. could this by any chance be related to their political donations?

what ever makes you say that?

Absolutely yes.And no discount council tax for 2nd homes and tax BTL income too

i was on hb, needed to use the councils scheme where i find a private landlord to accpet hb and they pay deposit and rent.
It was a joke, 3 lanlords in the whole of my (considerably large and affluent town) would take hb.

so what the fuck are we supposed to do?

rent rest should absolutly be in place but will that happen until house prices are lowered? no. no one wants to lose money on renting that hardly covers the cost of a mortagage.

houses need to half in value if not more. but it wont happen as it serves the rich.

the majority of people in the uk are not rich, our country and gov should serve the majority. not the fucking welathy.

After watching the program about the history of a particular street in Chelsea, I say yes we should have caps, on both rentals and sales.

The whole things gone mad it starting getting stupid with the introduction of mortgages now that madness has pushed homes out of reach it's filtering down to the rentals.

That TV show, spoke of the time the caps where lifted when the landlords of the area forced the poor out in order to get the higher rents from the rich people who wanted to live near the centre of London, via leaving the houses to rot, not repairing anything and verbally abusing tenants.

I think we need caps. It's getting so that even people with relatively decent jobs can't afford to live in London.

We pay just over £1000 a month, plus all the bills, for a tiny one-bedroom in the basement. Area is in zone 2, east London, but it's hardly in the trendy part. We have damp, no storage space and although it has been nicely converted, the builders have done a total cowboy job and everything is falling to bits. The cost considering how the flat is is just ridiculous.

It will be all change next year with the introduction of Universal credit (UC) which will have a ?housing element? included. Direct payments

Yes there should be rent controls. Even Housing Association properties in my town now require a top-up on top of Housing Benefit, due to this Governments not so fucking 'Affordable Rent' scheme.

Affordable to WHO?! Certainly not to someone working FT for NMW, as are more than half the people that work FT in this town.

Average rental cost for a 3-bed Housing Association property here is £650 PCM. Maximum amount of HB paid out for a 3-Bed? £500 PCM. And private 3-beds go for £800 PCM.

And someone working FT for NMW won't even GET the maximum HB allowance. The most they will get is £300 PCM help from HB. To pay rent that is on average £650-£800 PCM depending on whether they could actually GET a HA property, which the majority can't as the waiting list is 3 years+.

Then there is the problems of BTL LL's who accept tenants on HB being few and far between. There is no deposit scheme in my council area either, and for someone who works FT for just £11,650 BEFORE tax, finding upwards of £1,750 to cover the two months rent that is required as a deposit and the Agency fees, is just unreachable, it's somewhere around 20% of their annual income!

Add to that the fact that housing costs under UC will only be paid for two years (whether in work or not), and without Rent Controls being put into place, you have a perfect shit-storm brewing over housing...

IMO, Rent Controls are a necessary evil to bring the HB bill under control, even if it DOES mean that some LL's will have their SECOND HOMES repossessed.

I'd far rather that a reluctant LL lost an income stream whilst still having a roof over their head, than to see families with DC homeless because they happen to earn a low wage!

And if they lose their rented home because they can't afford to cover their rent, how does anyone propose they cover the rent in Temporary Homeless Accommodation, when the rents can be £500 a week or more?! Especially if their wages don't even cover normal rents, and their housing costs help has stopped.

And surely stopping help with housing costs after 2 years is only going to make Private LL's even MORE reluctant to accept Tenants on HB, even partially on HB, because they will know that after the tenant has been claiming help with housing costs for 2 years, it will be stopped for a period of time (as yet unspecified), and the LL's will KNOW that the tenant will be unable to cover the rental costs.

So, there's not enough Social Housing for those that need it (though the low paid will still face this in Social Housing, due to the bloody 'affordable rent' thing.), and Private LL's are going to be EVEN MORE reluctant to let to a tenant even partially on HB.

Where exactly are the low paid MEANT to fucking live?!

I think in less than 5 years time, we will start to see shanty towns being built all over the country. And I'm being fucking serious!