THE BLOG

Should We Cap Rents?

06/07/2015 11:50 BST | Updated 06/07/2016 10:59 BST

Britain is in the midst of a housing crisis, caused by successive governments not building the affordable homes we need. Strikingly, this has led to a rocketing number of private renters, as home ownership and social renting plunges. Private renting used to be a stepping stone for students or young professionals, but it is now a permanent home to one in four families.

For some, renting is a good option. For too many, it's a cycle of high rents, short term contracts and unexpected fees or rent rises. And it is families who face the brunt of this, with the disruption of regular moves and rents eating into their tight finances. Right now, for every £10 coming into the average renter's wallet, an incredible £4 goes on rent, every single month.

Understandably, more and more renters are joining Shelter's campaign to demand improvements.

So why don't we just cap rents? It would be quick and direct, and instinctively, it feels like an easy way to make life cheaper for Britain's eleven million renters.

Debate rages on this issue. Some argue that any intervention, no matter how small, in the market will cause landlords to flee. Others are adamant that we need rent caps to bring rents down now.

We just want what's best for tenants - and it was clear they needed some evidence on this issue, so we commissioned Cambridge University to look at various forms of rent regulation, and model their potential effects.

Their research delivered a resoundingly clear conclusion. Though they appear an easy solution, rent caps could actually cause more problems for tenants. The researchers predict that driving down the cost of rents in this way will cause evictions to rise, conditions to get worse, and make it a lot tougher for any one on a low income (especially those on housing benefit) to find somewhere to live.

But the research also showed that the market could easily cope with being more supportive for families. When tested, the economic modelling provides compelling evidence that it would be safe to introduce longer term tenancies, where rents can only rise by inflation.

A tenancy of five years, as we've proposed at Shelter, and is successfully used internationally, would give families vital stability to settle their family, and ensure they feel properly at home. Knowing that their rent could only go up by inflation, they would be able to plan their finances more easily too.

However, this still leaves a very real problem - this doesn't do much for the high cost of rents. And here, sadly, there is no short cut. If we're serious about wanting house prices and rents to be more affordable, then we have to be building more genuinely affordable homes.

At Shelter, we sincerely hope George Osborne is thinking about this while he's putting the finishing touches to this week's budget - because in the last five years, the budget for building these homes was cut by over 60%. There is no way out of this affordability crisis without more affordable homes.

As the charity for people experiencing bad housing or homelessness, our focus has always been on what delivers for tenants. We're proud to continue that tradition of standing up for renters today.

In this case, what works best for them isn't rent caps. Caps could end up making the lives of tenants on low incomes much more difficult, not easier. But that doesn't mean we don't need change. Renting families deserve the stability to raise their children that others have, and this research shows that the market can offer that, and continue to thrive.

Housing is incredibly expensive in this country and that needs to change. For the millions priced out, longer-term tenancies are medication, not an antidote. With a bold plan and genuine investment, we can build homes which are affordable - both for families to buy and to rent - and which enable people in this country a real shot at a place to call home once more.

Campbell Robb is the chief executive of Shelter, the housing and homelessness charity