Rent Controls Crazy, Even for Labour

Labour’s economic illiteracy has plumbed new depths with Poto Williams reportedly considering rent controls.

It’s a crazy plan, even by Labour’s standards.

Rent controls have been famously described as the most effective way to destroy a city except for bombing.

At a time when the property sector needs confidence to build, Labour has dropped another bombshell.

As an economist, I know rent controls will mean fewer incentives for landlords to maintain existing properties and fewer incentives for property investors to create new supply.

“The Government has already been told by its officials:

‘International experience shows long-term rent controls impact the supply of rentals and incentives to invest in the quality of their properties…it could affect landlords’ willingness to build new supply for rental.

‘In an environment of constrained supply, rent controls have been shown to lead to discrimination by landlords on factors other than price, or could encourage tenants and landlords to make/accept illegal additional payments. Once in place, rent controls are difficult to remove as the removal leads to a price correction, which is greater the longer controls are in place.’

Building housing supply is a long-term activity. It takes years, paying for them takes decades. When the Government changes the rules of the game at a whim, confidence suffers and less gets built.

Labour has done everything it possibly can to make it harder to bring new houses to market.

This Government may have the best will in the world, but everything it does has the opposite effect. Attacking groups like landlords is fundamentally divisive. The role of Government should be to foster confidence so there is more investment. This lot are doing the exact opposite.