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 :)

Well said, CouthyMow - unless this policy is reversed and help given to lower the rents NOT the amount given to cover the rents, then I dread to think of the situation we will be seeing here. Like Greece, will families be handing their kids over to be put in care because they can't afford to look after them/house them? Will we see riots that will make the last lot look like nothing? Will we see loss of life as a result of these changes or whole families made homeless with kids sleeping on the streets?

What kind of a third-world country have we become!

But that's Ok, as long as the banks have their millions in QE, the bankers their bonuses, the politicians their multiple property portfolios (my (Tory) MP owns 22 houses, by example), companies like Vodafone their 6bn in unpaid taxes etc etc etc...

I think the mortgage clause that ll cannot rent to people on hb needs to be looked at by a court of law. it stinks of discrimmination.

I also think council owned homes should be a thing of the past, it's very restrictive and causes whole area to become 'slums' and undesirable to live in.

third point is a real gripe: property developers. firstly the homes they build are overpriced for what they are, small and unsuitable really for many families. secondly, they are so boring. just look at the rows and rows of identical houses where ever you are in the country.

QE does not give money to banks. its used to buy low risk assets from the banks and put more money in the system.

the Bank of England then owns the assests that previously belonged to the banks.

its a sale not a gift.

and QE has been a disaster for pensioners and has just made fragrant types like Bob Diamond even more arrogant.

is it possible for Bob Diamond to be more arrogant? i mean really??

When he did his lectures for Radio 4 last year he KNEW that his firm was under investigation for fixing LIBOR.

Citizens arrest might be a good thing.....

Its scum like him who have pushed up the house prices in parts of London.

"QE does not give money to banks. its used to buy low risk assets from the banks and put more money in the system.
the Bank of England then owns the assests that previously belonged to the banks.
its a sale not a gift"

This assumes the "system" will pass it on. The consistent picture is that they have not passed it on, and have used it to increase their reserves. Happily Mervyn King was outvoted last month, and we avoided pumping another pointless £50bn into commercial bank reserves.

As far back as last year the Department for Business voiced doubts as to whether QE could stimulate the economy.

The Bank for International Settlements has warned the QE is holding back growth and helping banks avoid cleaning up their act.

It's quite insulting to tout a "QE is helping line" when the country has swallowed enough pain from this kind of disinformation and judgemental error already. At last in June enough members of the Monetary Policy Committee showed some sense and intelligence. We can only hope they continue to do so, and stop feeding bank reserves, when the banks have no intention of passing the liquidity on.

genug This assumes the "system" will pass it on yes, it is flawed. i was making a different point about gifting v selling.

...stealing the idea from another poster's thread entirely.... if you dont like Barclays behaviour and do bank with them, move your account.

otherwise you are justing gving your money to Bob Diamond & co.

fantastic post couthymow, i didn;t know UC will only be paid for two years - have you got a linky please?

If there are no controls on rentals does this not mean the Landlords can set their price and the Local Authority will have to pay no matter how ridiculous the amount is. This is what is happening. And it doesn't really benefit anybody in the long run. Except landlords.

vivienne
NO. HB is capped at £300 per week.
If a landlord charges above that then the tenant has to find the money
or the tenant goes elsewhere
and the hope clearly is that rents will fall ...

Not sure if this has been suggested, but if home owners were covered for payment when they lose jobs etc, there would be less demand for social housing and far more stability for families. I know quite a few people who have sold up as they have become unemployed and the taxpayer now pays their overpriced rent.

But isn't this cap quite a new thing. I had a bit of a row with a friend over this. She said all the poorer people will be forced out of areas of London and that would be wrong.

But if people can't afford to buy in London and Landlords are hanging on to houses and getting huge subsidies via rent, courtesy of the tax payer then this can't be right either.

Yes, we should have rent controls.

As we used to do with local rent tribunals, pre-Thatcher.

Lots of people have been repossessed, by the way, for missing two to three mortgage payments - payments they might not have been missed if the criminals who fiddled the LIBOR rate had been controlled.

fedup
its called PPI - do not go there they are still unravelling the mis selling from 15 years ago.

vivienne
rent should be a market, as purchasing is. At present the rental market is distorted with taxpayer money.
A cap on HB is a good thing - bring it in during the olympics was pretty effing stupid though

What's PPI?

Shared ownership schemes are also criminal. You pay half the mortgage of a property valued at twice its real price, then pay rent on the other half which you can't afford anyway so the government bails you out. And then you pay service charges for the property's maintenance. These ridiculous scams have to stop.

Germany also had extremely high rents in the big cities now but I'm not sure whether something has changed there for that to be happening now. Probably some ruling from Brussels.

We do have to consider regionalising more work and having higher wages for employees of companies that invest abroad (that's most of them). That will stop the extremes of rent levels.

Our governments have been impotent against big businesses, whether banking or property development. It's time for us to grow a pair andan up to these crooks (or get a woman pm in who isn't afraid of the fat cats).

PPI en.wikipedia.org/wiki/Payment_protection_insurance

Custy - it's the Housing element that will be stopped after 2 years. There then needs to be a 'break in the claim' (as yet unspecified, figures between 12 and 26 weeks are being bandied about).

I can't linky, am on phone, but it is linked to on another thread in politics - will post the thread/poster/post time in a sec!

While I agree that the HB bill MUST be lowered, capping the amount of HB payable is not going to help, because these people can't pay huge commuting costs to their jobs either, so have to live a small, affordable bus journey away.

All capping HB and stopping housing costs help after 2 years will do is leave those reliant on it due to low income homeless. The rents will NOT come down quickly enough to solve the situation without the 'collateral damage' of FAMILIES WITH DC being made homeless in the meantime.

Rent Controls bring down the HB bill too - but without causing the same homelessness problems. Because while some LL's would either have their rental properties repossessed or be forced to sell them at a loss, that would bring out those properties onto the SALE market at a reduced rate, which would enable those renters who are ready to buy to buy a property at a more affordable rate.

Two birds with one stone, are Rent Controls - flood the sale market with repossessed BTL properties / cheap sale due to rent control level not covering current mortgage, and house sale prices come down. Rental prices have gone down because the remaining LL's are still covering their mortgage or are mortgage free, so not so much HB being paid. It would solve the issue of a stagnant sale market, AND it would lower the massive HB bill, at the same time as getting money moving through the Economy. What's not to like? Oh, sorry - what's not to like unless you are an over stretched BTL LL, or a greedy one who still wants the same level of profit on their 'investment', like a lot of the current crop of politicians of ALL flavours, many of whom have extensive property portfolios...

Push the low paid out of town centres, City centres and near schools, and you lose shop staff, hairdressers, restaurants, school cleaners, MDA's, school caretakers, hospital support staff, TA's, preschool staff, Nursery staff, bin men, and many other things that you will miss when they are gone.

(oh, and even the Government's OWN UC policy briefing notes accept and fully state that there WILL be done families that are 'collateral damage', but that the Government believes this is acceptable in order to lower Welfare costs. Yes, ok to them in their Ivory towers. NOT ok to those families that ARE the 'collateral damage'...

Couthy Mow I think you've got it sewn up!

But the thing that NO politician will want is for house prices to go DOWN. That's the problem. Millions of people in negative equity will mean repossessions going on everywhere (this has already happened in the US).

However it is absolutely unavoidable. House prices will have to come down, tears will flow but at least we won't be making the bankers richer on our sweated labour any more.

Did they use the term 'collateral damage'? That's disgusting.

What about people who lose their jobs and can't afford their mortgages. They never seem to get a lot of help. House prices are artificially high. And huge subsidies via housing benefit is helping nobody except landlords. That's what I think. Everyone complains about the slow housing market. I know quite a few young couples with decent wages that can't afford to buy a property. It's getting harder and harder.

You're right Mary, prices have to come down but most people don't own their homes, the bank owns their homes and they are paying the bank a mortgage that won't go down even if the value of their home does.