A Nationwide Rent Freeze Would Hit Struggling Households Harder in the Long Term
Bob Blackman MP
October 27, 2022.
In recent weeks Nicola Sturgeon has introduced a rent freeze in Scotland in an effort to address the cost of living crisis that has resulted post-pandemic.
Whilst in theory this may seem like a nice idea for tenants struggling to juggle rent, food, bills and other necessities, the practicalities are not there, and the trickle effect on landlords could be sinister.
I do not believe that this legislation is the most appropriate route to help ease the burden on families as we enter the winter months, and thus most definitely should not be extended to further regions of the United Kingdom.
A rent freeze would be fundamentally bad for the UK government to adopt. Our already very ambitious target to build an additional 300,000 homes a year would become impossible and many people would become homeless or their housing situation compromised as a result.
If property companies are not able to adjust their rental pricing, whether that be in line with inflation, rising property costs or home improvements, it will become very difficult for them to raise enough money to increase stock levels. Without new investment in housebuilding and property development, we see the annual number of homes being built declining rapidly and consequently many people will suffer. This will undoubtedly increase the pressures from the cost of living crisis more so than if they had proportionate rent rises.
For many people, their income relies on the money coming in from rented property. Over the six month freeze, potentially longer if extended through the emergency legislation, these people will not be able to see any increase to their income while many other sectors will be increasing income to keep up with inflation. This has the potential to hit many families hard and for them make the cost of living crisis more of a threat when faced with feeding their families or heating the home.
It seems unjust to target one sector harshly but not others. It also risks initiating the sale of rental property as no longer profitable on the rental market. This will displace many people who are pushed out of their home because it is being sold by landlords to alleviate financial hardship as permitted in the emergency legislation.
If a landlord is operating a buy-to-let arrangement with a mortgage, the rise in interest rates means there are pressures to raise rents or dispose of the property. The overwhelming number of private rental properties are let out by landlords owning one or two properties so the pressure on the margin between interest rates and rental rates inevitably means that, when any rent freeze is removed, there will be a dramatic rise in rents.
Another reason for not imposing a rent freeze is that the quality of housing is likely to diminish. Whilst other services like plumbing or decorating increase their service costs, landlords will find it harder to keep up with essential maintenance and improvements to the properties. This will result in tenants paying the same rent but sacrificing the quality and necessary improvements to their property in many cases.
Further, many firms providing rental properties are being encouraged to go greener as the government strives for its net-zero goals. The cost of going greener can be high and the incentive to accelerate this transition or merely afford it is not there if landlords are having their rental income capped through a rental freeze.
Overall, the rollout of such a scheme should be discouraged and I would certainly not support it as I firmly believe that the costs will hit families far harder in the long term than it will help them in the short term.
Bob Blackman is the Conservative MP for Harrow East.
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