Wednesday 14 May 2014

Leading Tory does "one-sided economics"

From City AM:

THE GOVERNMENT has announced plans to force letting agents to publish the fees they charge tenants, both on their websites and prominently in their branches.

In a policy designed to take the wind out of Labour’s proposal to ban the fees charged to tenants, Nick Clegg revealed that the measures would help renters to shop around and get the best deal when moving home.

"Short-term gimmicks like trying to ban any fee to tenants means higher rents by the back door," housing minister Kris Hopkins said yesterday.

"Excessive state regulation and waging war on the private rented sector would also destroy investment in new housing, push up prices and make it far harder for people to find a flat or house to rent," Hopkins added.


If these restrictions mean that the landlord pays the fees, but recoups them via slightly higher rents, then it will make no difference to anything.

If we had proper rent controls, i.e. waged a proper "war on the private rented sector", as the UK did for most of the 20th century (which included undercutting them with social housing), then he looks at the one side (fewer landlords buying and renting houses privately) but completely ignores the other half of the equation:

- The amount of housing coming onto the market being bought by former tenants who would rather be owner-occupiers, which is probably most of them would increase to match the fall in demand from BTl 'investors'.

- With less competition from BTL 'investors', house selling prices would fall.

It's up to you decide whether the benefits of lower houses for you to buy outright outweigh the fact that there will be less accommodation to rent.

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