Rent controls – what are the options on the table?

Ahead of the upcoming Senedd debate on rent controls, Hugh Kocan explores what rent controls are, and what role they could play in making rents more affordable in Wales. 

Rents have increased significantly over the past twelve months. In the past year, Rightmove has recorded a 12.9% increase in rents in Wales, the largest increase anywhere in the UK. With other living costs also surging it is perhaps not surprising that there has been increased discussion about how to ensure that rents remain fair and affordable.

One idea that has risen up the political agenda over recent months is ‘rent controls’. In December the Labour-Plaid Cymru co-operation agreement contained a pledge to publish a white paper on ‘rent controsl’, whilst this week, the Senedd will debate Mabon ab Gwynfor’s Member Legislative Proposal on the issue.

What are rent controls?

There are two broad forms of rent controls.

Rent caps place a ceiling on what landlords can charge for rent. A form of rent caps were introduced in the UK during both the First and Second World Wars, but there are few large scale contemporary examples of this form of rent regulation.

Rent stabilisation on the other hand does not put an overall cap on rents, but rather, sets out the maximum amount rents are allowed to increase year on year or month on month. Rent stabilisation measures are more common. For example, in Ireland, areas of high rent can be declared Rent Pressure Zones. In these zones rents cannot increase by more than inflation, or 2%. Indeed, rent stabilisation measures are already in place in Wales within the social housing sector.

Understanding this difference is key if we have a robust policy debate in Wales.

Questions to consider

There are broader questions to be examined during any debate on rent controls beyond exploring which model of controlling rent control should be put in place.

The first relates to the geographic extent of any rent control measures. As noted above, in Ireland rent controls are limited to high rent areas. Social housing rents are regulated at a Welsh level, however. It is therefore important that any discussion on rent controls considers the arguments for and against adopting nationwide or a more local approaches to controlling rents.

Second, there is a need to consider whether we have access to sufficiently robust data to implement effective rent controls. The Bevan Foundation’s ongoing work on the Local Housing Allowance has found that a significant gap has opened between LHA rates and market rents. One reason for this gap is a lack of robust data. Addressing any such weaknesses would be imperative before implementing rent controls.  

Third, there are international examples of different restrictions being placed on different types of landlords. A new form of rent control recently introduced in Spain, for example will only apply to landlords with 10 or more properties. Would we wish to see similar variation in Wales?

The time is right for a debate

There is little doubt that there is need for significant action to improve access to affordable housing. It is therefore to be welcomed that there is increased interest within the Senedd to explore a range of options to achieve this aim. Rent controls could have a role to play in achieving this objective. It is vital however, that we carefully consider the strengths and weaknesses of the variety of approaches available if rent controls are to effectively boost access to affordable housing.