Rent Stabilisation Measures & Landlord Response >Research By University of Cambridge >Cambridge centre for Housing and Planning Research
The report commissioned by the London Assembly Housing Committee carried out by the Cambridge Centre for Housing and Planning Research (CCHPR), surveyed amateur landlords with just a few properties as well as commercial build to rent landlords and investors.
CCHPR put forward six potential scenarios of rent stabilisation, from a one off rent freeze for three years, through to linking rent rises to wage rises.
Some 60% of London landlords would reduce the size of their property portfolios in the event of a rent freeze, new research has found.
Response to rent stabilisation and control scenarios Landlords were asked how they would respond to a range of possible rent control scenarios:
- If the rents you could charge to existing tenants could only be increased in line with
inflation each year (currently 0.3%)
- If the rents you could charge on all properties (including when letting to new tenants)
could only be increased in line with inflation each year (currently 0.3%)
- If the rents you could charge on all properties (including when letting to new tenants)
were frozen for three years
- If the rents you could charge on all properties (including when letting to new tenants)were forced to be reduced to two thirds of current levels, and thereafter could rise only in line with inflation
Overall, the response of London landlords to this question was very similar to that of landlords throughout the country. As can be seen, landlords are less concerned about caps to rent increases than they are about a rent freeze. They were most concerned about the prospect of a forced rent reduction, with 45 percent saying they would sell all their stock and exit the sector if this were to happen. Nevertheless, even the prospect of a rent freeze resulted in four in ten landlords saying they would look to reduce their involvement in the PRS often not immediately, but over the coming years. The majority of landlords however said that they would not alter their involvement in the sector in response to a cap on rent increases (Scenarios 1 and 2)
If landlords were to do as they say they would do in this survey, the sudden exodus from the market under scenario 5 would cause a substantial impact on the housing market more generally as a very large number of properties come onto the market simultaneously. This is likely to cause a housing market shock and possibly a significant fall in house prices at least until the market corrects itself. It is hard to quantify the extent of this as a fall in prices could trigger landlords to stop selling properties, or new buyers to enter the market. Alternatively, a housing market fall can perpetuate itself as first time buyers hold off buying or landlords try to sell quickly before prices fall further.
The study also found that the majority of landlords would continue as they are if rents could only be increased in line with inflation, although 40% of participants stated that they would sell some or all of their properties if this measure was introduced.
The quantitative analysis suggests that the impact of the six scenarios would be more
significant in London than in other regions – this is because of the higher rates of rental
growth that may otherwise occur. Outside London there are some areas where rent grow this very low, or non-existent, and rent stabilisation measures would therefore have very little impact. This has not been the case in London over recent years, though past trends may not necessarily continue.
‘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,’
‘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 explained.
‘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,’ said Tom Copley, chair of the London Assembly Housing Committee.
London paints a diffrent picture from UK
The survey of London landlords however paints a somewhat different picture. Overall the views of London landlords were very similar to those found across England. The large majority were averse to rent controls, not just because they could reduce their rental incomes, but also because they resented the intrusion into what they saw as a market based transaction. There therefore may be some additional impact of rent controls arising from landlords aversion to the bureaucracy involved, regardless of the actual reduction of rent that may arise. As before, the research has given possible effects but by no means provide a conclusive answer to the size of the effects. The relationship between what people say they would do, and what they actually would do, given a specific situation, is inevitably uncertain. This is particularly so for a politicised issue such as rent controls where there are strong feelings involved. It was clear from the survey that many landlords were strongly opposed on ideological grounds
click to down load > Final report on rent stabilisation for London assembly
Affordable Housing >Demand Supply >Solutions Cambridge University
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