There are no plans to introduce rent controls in England but new legislation in Scotland means they are likely to be introduced in cities, with Glasgow leading the way.
Housing Minister Alok Sharma told the Resi conference that the private rented sector is high on the Government’s agenda and a ban on letting agent fees will go ahead but he scorched reports that rent controls could be introduced in England.
However, Glasgow City Council has voted in favour of a study to look at creating rent pressure zones in the city which would make it the first place in the UK to introduce these US style type of rent controls.
The move is Glasgow is aimed at curbing ever rising rents with the city’s private rented sector seeing an increase of 34% over the last five years. ‘This is the first concrete step towards city wide rent controls,’ said Craig Paterson, a spokesman for Living Rent, a group that is campaigning in favour of controls.
Legislation taking due to come effect in December gives councils in Scotland the power to designate areas where private rents have rocketed as rent pressure zones with further rises capped at inflation plus 1%.
Councils in other cities, notably Edinburgh and Aberdeen, are also keen to look at introducing some form of rent controls. Aberdeen is currently monitoring rents increase levels to assess whether it needs to introduce zones.
Under the legislation councils can apply to ministers to designate areas as RPZs when rent rises are causing serious problems for tenants, or a council is being pressured to provide housing or subsidise the costs of housing as a result.
Councils can then cap rents to match the consumer price index plus 1%, and the cap can last for up to five years. Before an area can be named as an RPZ, ministers must consult landlords and tenants. A similar scheme was introduced in Dublin and Cork in Ireland at the beginning of this year and rent controls are prevalent in the United States.
But Sharma said there are no plans in the current parliament to introduce similar legislation in England and also said that Build to Rent is a major part of plans to increase the quality and number of homes for the private rented sector.
‘The market is ready to support far more Build to Rent. Although, as a concept it is relatively new in the UK, there is an opportunity to build on lessons from the established multi-family housing sector internationally. The US is now delivering around 300,000 multi-family homes every year,’ he pointed out.
‘But it took them 30 years to get there. We have the opportunity to develop the sector more quickly here, by welcoming international investment and hearing from others. Having said that, I want to see more UK investors coming into this market as well,’ he explained.
‘I know some of you have concerns that rent controls may destroy future markets. Let me be absolutely clear, under this Government rent controls are not going to happen. The Government also wants to see all tenants receiving a good, fair and affordable service from landlords and letting agents.
‘So we will publish a Bill to ban letting fees paid by tenants in England. I know many of you in the build to rent sector do not charge upfront fees to your customers. But a ban will help to deliver a more competitive, more affordable and more transparent lettings market across the rest of the sector,’ he added.
Sharma also told the conference that improving standards in the private rented sector is high on the agenda. ‘In April we brought in tougher measures targeting rogue landlords, including civil penalties of up to £30,000 and an extension of rent repayment orders. These powers give authorities the tools to crack down on the minority of landlords who disregard the law and take advantage of tenants,’ he said.
‘They will also help address any lingering reputational issues for you and those interested in investing in Build to Rent. We will go further over this Parliament and we intend to introduce a database of rogue landlords and property agents convicted of certain offences. There will also be banning orders for serious and prolific offenders,’ he added.