Opinion  

Two steps back

Financial Adviser

More and more, life in 21st century Britain is beginning to resemble the trouble and strife of the late 20th century.

The latest public policy mess to rise like damp on the social landscape is the suggestion that one way of tempering the so-called housing bubble is by way of the re-introduction of rent controls.

Those who remember that disastrous policy of the 1970s, one of the first that gave town hall authoritarians power to intervene in private contractual arrangements may recall the problems it caused, rather than what it solved.

Article continues after advert

There was an almost immediate drying up of homes available for rent, putting greater pressure on local authorities and directly to the rapid growth of housing associations as a third way.

In Notting Hill, in West London – now the home of the trendy and nouveaux riches – once the playground of the late Peter Rachman, the notorious landlord whose name became shorthand for brutalism, gangsters moved in.

But like most evil, Rachmanism emerged to fill a need, just as the rise of the Notting Hill Housing Trust, was created to fill one. The proposal by Ed Miliband is to impose a cap on private sector rent. As we have said before, the housing crisis is a supply side one that could surely be met by the easing of restrictions on building on brownfield sites and the creation of new towns and garden cities.

Until then, particularly in London and the South East, there will be a struggle for too few rental properties on the market. This basic reality, combined with the fact that we are living in a low-interest environment and are likely to do so for at least another few years, and the demographic time-bomb affecting retirement incomes, has led to the rise of the buy-to-let phenomenon.

Few, if any, buy-to-let landlords are modern-day Rachmanites; they are people who want tenants who pay their rent on time, protecting their property and in other ways being socially responsible.

As things stand, some people with empty homes which can easily be made available to rent are reluctant to do so because of the awful reputation of Generation Rent.

The trick is to encourage those people to enter the rental market.