Published: 19 Jan 2015 by John Bibby

At the beginning of the month the Independent reported that ‘almost nobody in the UK is opposed to rent controls’; polling showed that 59% of people supported their reintroduction. 7% were in opposition and a sizeable 34% didn’t know.

And to be honest, if you were to ask me only whether I supported the introduction of ‘rent controls’ without any detail I’d be with the 34%.

Like any kind of regulation, not all rent control is good or bad. It depends on exactly what the proposal is and where it will apply. As the rather more nuanced editorial that accompanied the article said “…the choice is not between sledgehammer controls and nothing at all.” The devil is in the detail.

And the opportunity for widely different detail is significant. Rent controls are typically divided up into belonging to two or three ‘generations’ depending on whether they limit absolute rent levels, increases in rents between tenancies or just rent increases within tenancies. But even this distinction can over-simplify the extent of the difference between different regimes and how they act in practice.

In practice, an absolute freeze on all rents at existing levels is very different from an enforced cut to below existing market levels or instituting a ‘fair rent’ regime. A 10% limit on rent increases between tenancies is very different from a 100% limit. And so is the difference between always limiting in-tenancy rent increases to inflation and establishing a municipal board to annually decide the maximum increases landlords are able to charge.

Nor does the complexity end with the detail of regulation that concerns rents directly. How the policy interacts with other national regulation matters hugely. Because in a situation where, for example, rent increases are limited during tenancies, the minimum legal length of a tenancy is critically important. If your landlord can just kick you out and get a new tenant at a market rent then restrictions on rent increases are relatively meaningless.

The Cambridge Centre for Housing and Planning Research in their 2012 comparison of international rental markets produced six regulatory indicators that are a good starting point for considering the extent of the regulations effecting rents:

• Initial rent setting
• Rent increases during a tenancy
• Length of a lease
• Capacity to get a property back during lease
• Capacity to sell/transfer to other tenure
• Enforcement or eviction if contract broken

All of which leads to the possibility of a large number of different regimes of rent regulation, with different advantage, disadvantages and trade-offs.

It also acts as a reminder that even in the current English sector, private rents are lightly regulated, albeit extremely minimally. Because landlords can’t just hike up the rent whenever they want, even within an Assured Shorthold Tenancy. Rents are fixed within fixed-term contracts and can only be increased once every 12 months under a rolling (statutory periodic) contract. This may mean for example, that landlords can and do absorb cost pressures like an interest rise hike for up to a year before they are able to increase rents.

But despite the plurality of options and England’s existing regulation, the choice on rent control can often be characterised as a binary choice between nothing and everything. And the public debate about rent control can sometimes descend into a stale ideological row between people who are vehemently in favour or against rent controls on point of principle.

For some in favour, the dizzying unaffordability of private rents justifies almost any intervention. For some against, any increase in regulation threatens to send the English housing market into an End of Days scenario.

The problem is that both the concerns of those in favour of and against rent control in principle are founded on reasonable worries.

Concerns about the contraction of the sector and a crash in house prices are perfectly legitimate. As Steve Hilditch over on the Red Brick blog rightly points out, house price crashes are carnage, never something to be relished.

The burden of such a crash never falls principally on those most able to pay, but – as Amir Sufi and Atif Mian identified in their cracking appraisal of the 2008 US house price crash – on those with the largest debts who are least able to pay. The net effect in the US was a dramatic regressive redistribution of wealth from the indebted poor to rich savers. There’s no reason to assume the same wouldn’t happen here, with equity rich homeowners able to withstand a fall in prices and mortgage holders left dangerously over-exposed.

But it is equally legitimate to be concerned about the high cost of private renting in England and the fact that nationally it on average hoovers up 40% of renters’ take home pay – well over the 33% that is typically thought to be affordable. In high demand areas like London, it can take even more, pushing people further out or away from the city entirely. With more and more families living in private renting long-term, high and rising rents can make housing insecure and unstable.

We shouldn’t pretend that there is an ideal form of rent regulation that will make private renting affordable for everyone. But that shouldn’t stop us from trying to work for the best possible one that we can hope for in England – one that improves affordability without leading to catastrophe. And such a policy lies somewhere in the detailed middle between the poles of absolute rent caps and no regulation at all. Remember that we already have a form of very light regulation.

Is discussing such a detailed middle possible?

Yes, I think so.

When it comes to something like income tax, we’re able to have a public debate to democratically determine this detailed middle. We’ve moved on from discussing the principle of whether there ought to be an income tax at all; that the answer is yes is almost unquestioned. The public debate is about bands and rates, how much and who should pay.

If we are going to get any closer to doing something about rent affordability we need to move in that detailed direction.