‘Rent controls like socialism are doomed to failure’ says leading economist

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A political economist has compared rent controls to socialism and insists they are always doomed to failure.

Sadiq Khan is determined to demand powers to implement a cap on rents in London if he wins the upcoming mayoral elections.

However, Dr Kristian Niemietz, head of political economy at the Institute of Economic Affairs, believes the capital would be wrong to introduce controls because, just like socialism, they have been tried dozens of times – and never work.

The Labour party has also vowed to put bad landlords out of business and promises a new “charter of renters” rights to put power back into the hands of tenants, with a rent cap linked to national inflation.

However, earlier this year, the Scottish government admitted that its similar Rent Pressure Zones had been a flop.

Dr Niemietz uses Berlin as the latest example of the system’s failure, telling City A.M: “After the introduction of a rent cap, the supply of rental properties coming on the market fell by almost half, at a time when it increased in comparable German cities. But, needless to say: the cap remains.”

Ben Beadle, chief executive of the National Residential Landlords Association, agrees that rent controls would be a disaster for London and warns that any move to control rent rises by linking them to inflation would leave tenants worse off.

He adds: “The story of rent controls wherever they have been introduced is that they exacerbate an already serious shortage of available homes. Rather than calling for things he cannot deliver, the mayor should focus on using the powers he already has to boost the supply of available housing, including for private rent.”

It says figures from the Office for National Statistics show rents in the capital have fallen by 9.6% between April 2016 (the month before Sadiq Khan came to office) and February 2021.

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Cladding Remediation: Cost of alternative accommodation?

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Sometime in the near future, the remediation of cladding issues will need to take place in several developments in which I own apartments. It is possible that complete external walls may have to be removed, such that my tenants would have to relocate for a period of time.

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No confidence in legal advice from property experts?

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I own the freehold of a property consisting of two self-contained flats. I bought it at auction. There is no other title and there are no common areas in the property. I live in one flat and rent out the other.

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PICS: ‘Investment flat’ panned on social media for strange internal scaffolding

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Fans of Bristol’s famous Suspension Bridge can recreate the architectural achievement in their own living room by snapping up an ‘investment flat’ in the city.

The apartment is a snip at £140,000 when the average house price tops £300,000, but potential landlords should be warned that its unorthodox room layout features a bed suspended above the sofa using metal scaffolding, in what looks to be the kitchen.

The double-decker sleeping arrangements might suit professional pole-vaulters keen to fit in some practice, as it doesn’t appear to have a ladder.

Its strange set-up has caused a stir in local media and on Twitter with user @lucyvharrison posting: “One-hundred-and-forty thousand Great British Pounds to have your bed suspended above your sofa in your kitchen. I didn’t think Bristol had reached London levels of madness but here we are.”

Mopping up

Meanwhile, @Candiwrites: “Classic Bristol landlord vibe with the hoover and mop more expensive than the bed. They’d replace a single slab of laminate before replacing your hip when you’ve fallen out of a bed hanging from the ceiling on silly string.”

Local agent Connells believes it’s “a truly unique opportunity to own a stylish studio apartment in the heart of Bristol City Centre”, adding that the Baldwin Street studio flat has, “a sociable open-plan living space which is the perfect place to relax in the evenings” – as long as you’re comfortable with a large bed hovering above your head.

The agent euphemistically labels the room, “incredibly low-maintenance living space” but evidently hasn’t convinced any landlords to snap it up; although the flat came on the market in January priced at £160,000, its price has been reduced twice since then.

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Ministers consult commercial landlords on how to end Covid restrictions – have your say!

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Commercial landlords have been invited to have their say on how the government should wind-down the evictions ban and restrictions on recovering rent arrears.

The Ministry of Housing Communities and Local Government has launched a consultation to understand how landlords and tenants are responding to the build-up of rent arrears, prompted by firms being unable to trade normally during the pandemic.

It wants to assess the risk to economic recovery posed by remaining rent debts and to understand how landlords and tenants are adjusting existing lease terms to reflect the period of recovery that many tenant businesses will need once trading restrictions are lifted.

Views gathered will shape government policy and help it plan a “carefully managed exit” to preserve tenant businesses and the jobs they support.

Stark warning

Temporary measures, which also include restrictions on the use of winding-up petitions and statutory demands, are in place until 30^th June, but the department warns: “If there is evidence that productive discussions between landlords and tenants are not taking place, and that this represents a substantial and ongoing threat to jobs and livelihoods, the government will not hesitate to intervene further.”

It adds that although many landlords have raised concerns about tenant businesses using Company Voluntary Arrangements (CVAs) to alter lease terms and disclaim leases of unprofitable locations, particularly after the landlord has agreed rent concessions with the tenant, their use doesn’t form part of this call for evidence.

Instead, the government will separately continue to monitor CVAs and the impact that these recent developments are having on landlords. 

Landlords can take the online survey until 4th May.

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BREAKING: Court fees for stranded landlords waived by government

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The government has listened to industry lobbying and confirmed that it is waiving renewal fees for landlords whose possession warrants have run out of time due to the ongoing evictions ban, and now have to be re-run through the courts.

This change is contained within detailed guidance issued yesterday by the Ministry of Housing, Communities and Local Government for landlords and tenants.

Now, the thousands of landlords who have an outstanding warrant possession that has expired or is about to expire have a three-month window from 1^st June to 31^st August 2021 to re-apply for a 12-month extension.

They will not be required to pay the usual £100 or £255 warrant extension fee. This applies to properties both in England and Wales.

The fee waiver will only be applicable to possession warrants issued after the start of the first lockdown on 16^th March 2020.

“Possession warrants which were issued or expired prior to this date will require an application and fee to extend the life of the warrant,” the advice says.

The announcement has been made ahead of 1^st June, when the current evictions ban ends and bailiff warrants can be enforced.

The updated guidance also makes one other change to the evictions process, allowing tenants and landlords to use the government’s new mediation service during the review hearing stage, should both parties wish to.

“The guidance says that cases could get allocated to mediation at the review hearings stage,” says Tim Frome of Landlord Action (pictured).

Read the detailed guidance.

“We’ll have to wait and see if that happens and if judges start contacting the parties at the review hearing to ask them.
“Both parties need to agree to mediation, but by the time it’s got that far it is unlikely a landlord would want mediation.”

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