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Cap in Hand or Cap in Rents

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Since our government is so keen on capping things, I propose a cap that is fair, sustainable and one which could solve Britain's housing crisis.

Despite knowing some of what was to come, I listened with horror and disbelief as the Chancellor presented his Autumn statement to the nation. For Mr Osborne, the notion that we are all in it together means that the rich are asked to sacrifice a significant amount yet still a relatively small amount of their overall wealth. The working poor and the "feckless" (whatever that means) are having to give back to the state a much smaller amount but one that represents a huge percentage of their wealth.

Although I appreciate what the government is trying to achieve, I believe this balance is wrong.

In its bid to try and trim down the welfare bill, and in particular housing benefits, the government has sought various methods of limiting spend on rental support: local housing allowance, benefit caps and now a 1% limit on increases to benefit.

In an economy with insufficient housing, rents have become superheated - spiralling ever upwards. Attempts to address the cost consequences by taking money away from the tenants are bound to fail. Instead of addressing rental issues, the measures are forcing people to chose between paying rent or feeding their families.

The poor working poor

Despite claiming to stand up for hard working families, Mr Osborne's measures are hitting the working poor as well as the allegedly feckless where it really hurts. If the government truly wants to represent working families, it needs to take a different aim to reduce welfare spend.

The fact that working families are exempt from the benefit cap does not protect them from the decision to limit annual uplifts to a maximum of 1%, nor will it protect them if their housing benefit goes up by 1% and their rent by 3.2%. Anyone who claims that I am merely exaggerating should consider why we now have more food banks in Britain than ever before.

Thankfully there are now a number of agencies, including Houses4Homes, that are working hard to plug the housing gap with affordable social housing. The challenge is that new construction starts are at a very low level and funds like ours - despite our large investment pot - will take some time to make even a small dent in the truly enormous and growing need for affordable housing.

Rent limits

I am therefore urging the government to do all it can to limit rents - in part by engaging with the private sector and in particular the market rent sector. In some districts, London being an obvious example, rent costs are truly eye watering and continuing to rise. Look a little closer and you will find a large number of properties advertised for tenants are excluding people on benefits; I suspect because landlords won't get the rent they want from the benefit system.

What we need is rent control. We need it now and for it to remain in place until such time as we have balanced the demand for housing with adequate supply. Once we have done this then the market can, once more, be allowed to determine rents. As it stands, the continuation of the free market for rented property, while supply is so restricted, sustains an abusive relationship in cost terms.

I agree that rent control seems a rather blunt instrument. No less though, however, than an arbitrary benefit cap with very few exclusions. And it would make all accommodation within a framework that is sustainable via affordability available irrespective of means. Such controls would not only help solve Britain's housing crisis. It would also encourage social housing investors to expect sustainable and reasonable returns and put their money into the regulated sector which offers security and predictability.

Impossible?

Introducing and sustaining rent controls isn't at all impossible. It just requires the political will to do so. Strengthening the landlord accreditation scheme which most local authorities operate already with enforcement rights would go some way in enabling controls while still providing the opportunity to set rent caps locally.

Would introducing and sustaining rent controls lead to an exit of landlords from the sector and leave a trail of empty properties in their wake? Of course not. Local authorities have empty property management powers at their disposal which could be strengthened and deployed successfully. With additional short-term resources, local authorities could in fact ensure that no residential property is lost to the nation.

We all want a stronger economy and to drive out excess and waste in public spending. This, though must be done with some basis of legitimacy. If the government introduces a cap on rent on a particular house in a particular area then this should be placed on the landlord and not the tenant. The fiscal result for the government is the same but fairer and sustainable. Such a move might even make this government re-electable.