Research: Rent controls could see a third of landlords quit the market
More than a third of private landlords have said they would sell properties if strict rent controls were introduced in their area, according to new independent data.
The statistics, from YouGov, show that, while most landlords’ initial reaction to plans would be to continue to rent homes – up to 64% for ‘light touch’ third generation controls – 37% said they would reduce the number of properties they let if an external agency was given the authority to set rents both during and between tenancies.
Such an exodus of landlords could have a devastating impact on the supply of homes to let at a time of ever-increasing demand.
What does the Government say?
The issue of rent controls in the PRS is never far from the headlines – not least in the midst of the current cost-of-living and supply crises.
The current Government has been clear that it has no plans to introduce such measures, however changes have been seen elsewhere and in England a number of mayors, including Sadiq Khan have been vocal in their calls for rent controls to be introduced.
Changes have already taken place in Scotland, where legislation to freeze rents for private and social tenants was introduced in 2022, something later amended by the Government, which has now capped increases during tenancies to 3%.
Elsewhere, in Wales, the Welsh Government has recently published a Green Paper Consultation exploring the issue of ‘fair rents’.
Former Shadow Housing Secretary Lisa Nandy gave a speech earlier this summer agreeing with the NRLA that rent controls could, in fact, increase homelessness. However it is unclear whether Labour policy on this issue will change with the introduction of new Shadow Housing Secretary Angela Rayner this week.
What else did the findings show?
Landlords’ plans tended to differ slightly depending on the types of controls proposed. These are broadly split into three categories:
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First generation rent controls – a 'hard' control in which rents are fixed and remain frozen
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Second generation rent controls – rent increases are limited to a set percentage or pegged to inflation
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Third generation rent controls – these allow initial rents (i.e., new tenancies) to be freely set by landlords or with a very light restriction but limit rent increases within tenancies
What has the impact been elsewhere?
While rent controls, on paper, might seem like a good idea to manage the cost of renting for tenants, analysis suggests there are unintended consequences that would impact tenants ability to both access homes and, potentially, housing standards. These include:
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Reduction in market supply due to landlords selling properties and exiting the market
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Reduced incentives for landlords to invest in property upgrades
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Regulatory failings and a lack of consistency in enforcement
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Inertia: Tenants in rent-controlled properties remain in those properties for longer periods, which can leave others, particularly younger renters - 'locked out' of rent controlled areas.
The NRLA has long warned that they controlling or freezing rents could actually make the problem worse, with landlords, no longer able to make their business models stack up, and more likely to leave the sector. It will continue to oppose proposals for rent controls, which it believes will only lead to a reduction in supply and standards in the PRS.
More information
To access the full research report click here.
