Could a rent freeze be a bad thing for tenants?

Could a rent freeze be a bad thing for tenants?

With demand so high in the UK for rental property, prices are now higher for private rented sector homes than they ever have been before. And given the strength that exists in the market, there is real potential for growth to accelerate in the next few years. 

With this in mind, many tenants may have welcomed the recent suggestion that there should be a freeze on rental price rises in London as part of a bid to ensure that tenants are not paying over the odds for homes simply because there are a lot of them in the market for properties. 

But could it actually be a bad thing for tenants if prices were to freeze? According to one report, this may very well be the case, with a survey conducted by Cambridge Centre for Housing and Planning Research (CCHPR) suggesting that freezes and restrictions on what landlords could charge, and by extensions what they could earn, would lead to many leaving the market in some way. 

This would present a problem with regards to the number of homes available. It can already be difficult for tenants to find somewhere to live in the age of 'generation rent' at the present time, so any drop in the levels of stock available would only be damaging to the market as a whole and present real problems for tenants. 

According to the results of the survey, 60 per cent of landlords would reduce the size of their property portfolios if they were restricted and could not increase what they charge tenants. 

It was also found that landlords would largely be against having limits set on what increases they could put on their proceeds. The report's authors asked what would happen if owners were only allowed to raise rents in line with the rate of inflation, and found that some 40 per cent of landlords would be looking to sell some or all of their rental properties if this was the case. 

At the moment, rental prices rise far faster than inflation, and have been doing so for some time. 

London Assembly Housing Committee, which commissioned the study, said the report showed that it's not about just restricting what landlords can earn to make renting cheaper for tenants, but rather finding a solution that would work for everyone in London. 

"Much has been said from all sides about rent controls but the debate has been sorely lacking in facts, so it's incredibly useful to have these set out in this report," said Tom Copley, chair of the London Assembly Housing Committee. 

"The choice is not simply between regulating rents and not regulating rents. There is no one size fits all system of rent control, with many cities around the world adopting different models. Each system has upsides and downsides," he added.

"In terms of what would work for London we need solutions that work for the millions of Londoners, especially families, in the rental sector. For families, the prospect of having to up sticks with very little notice often means disruption to many aspects of their lives, including schooling and employment."