Earlier this month, the government published a research document within the House of Commons Library, which aims to help MPs consider the reintroduction of rent control.
Since the Housing Act 1988 was introduced, rents on the majority of new private rented tenancies after the 15th January 1989 were deregulated in Wales and England. This has meant that the majority of Assured Shorthold Tenancies agreed between a tenant and landlord are set at levels in the open market.
However, the affordability pressures of some regions experiencing high housing demand has initiated calls for the return of rent regulation. Where the regulation would differ this time is that its aim would be rent stabilisation, rather than full scale rent control, which would herald the return of rent ceilings.
The briefing paper from the government claims to offer an overview of the discussion around regulation of rent control, including research information on a selection of worldwide rent regimes.
Recent data provided by the 2017-18 English Housing Survey has shown that the PRS (private rented sector) has grown increasingly popular over the past two decades, overtaking social housing in 2011-12 as the second largest tenure in the UK.
There is estimated to now be 4.5 million privately rented households, which equates to 20 per cent of all homes, and it is predicted that the rental market is still set to grow. Now, not only do buy-to-let landlords house more tenants on welfare than ever before, but the proportion of rental households with children has also considerably increased.
Due to rising housing costs, it is evident that private tenants now spend a larger portion of their household earnings on rent than social tenants living in housing association or council properties.
Since 1989, the private rented sector has remained deregulated in Wales and England, but the devolved nations of Northern Ireland and Scotland have taken different approaches, and this has resulted in calls to consider these options in Wales and England.
Since 1989, rent deregulation has removed the security of lifelong tenure, with the availability of competitive buy-to-let mortgage rates attributed to the rapid growth of private renting during the last 20 years.
As an increasing number of tenants are housed within the private sector rather than social or council housing, the government hoped that the Housing Benefit system would take some of this strain. However, the government is now showing concern that housing benefit expenditure is ballooning. The Department for Work and Pensions estimated that in 2013, around 33 per cent – some £2.9 billion – of expenditure, in private housing benefit could be associated with rent growth in real terms over the last ten years.
The briefing paper explains that there is now an increased focus on affordability of privately rented housing for low income groups, particularly in the South East, London, and other areas of high housing demand. In 2018, the average rent for a two-bedroom home in London was approximately half a London resident’s monthly salary when working full-time. In the whole of England, this proportion was 26 per cent.
The number of tenants being evicted and tenancies ended is another concern, particularly in the case of low income tenants living in high-rent locations where there is a diminishing level of Local Housing Allowance Rates.
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