Renters are understandably angry about the unaffordable cost of renting. In the capital, average rent for a two bedroom flat is now a whopping £1,495 a month. Other parts of the country are also experiencing record highs.
Shelter is deeply concerned by how unstable and unaffordable private renting has become. The record high costs of private renting have led to renewed calls for some form of rent control. But we’re not convinced that comprehensive rent caps are the best answer.
Is rent capping the answer?
There are two different ways of using the law to control private rent levels:
1) The old-style rent cap involved setting overall maximum rent levels, giving tenants indefinite contracts, and limiting the rent increases that could be charged to tenants once they were in a contract. It was originally introduced in the UK in 1915 as an emergency wartime measure to deal with housing shortages caused by the absence of any building workforce. However, few comparable countries have such an intensive set of controls today.
2) Germany, France and Spain use what is sometimes called second generation rent control to calm rents without directly setting prices: rents are determined by the market at the outset; renters have longer term contracts and, as long as renters are in these contracts, their rent can only be increased by an inflationary index, such as RPI or CPI.
We think that the second option would dramatically improve private renting in England- and we’ll explain why later on. Although we wouldn’t call it rent control as this often adds to the confusion.
