05/01/2015

Inflation-busting rent rises should be banned and indefinite tenancies should become the norm in the private rented sector (PRS), a leading think tank has said.

PRS ‘needs rent controls and indefinite tenancies’

Civitas, an independent right-of-centre think tank, also said Ed Miliband’s controversial proposals for reform of the private rented sector ‘do not go far enough’ in a report published today.

It warned that the availability of housing benefit is creating a ‘vicious cycle’ of inflation with landlords able to fix ‘artificially high’ rents at the lower end of the market.

Dismissing concerns that rent regulation would deter investors from the sector, the report said rent should not be allowed to rise above inflation once freely set at the start of the tenancy.

It also said tenants should ‘ordinarily’ be allowed to remain in the property ‘for as long as they wish’ to make the tenure suitable for families.

‘Any attempts to interfere in market prices arouses suspicion, and justifiably so,’ it said.

‘However… private sector rents are already distorted – upwards – by a system of subsidies that places a floor under prices, at least at the lower end of the price spectrum.

‘In the context of this vicious circle a system of rent regulation would be justified, to curb further inflation in the cost of private renting and so limit the numbers of additional people dragged into housing benefit dependency.’

The report comes as campaign group Generation Rent revealed that the majority of people support the return of some form of rent control.

It said that rent controls would not damage housing supply, as landlords were often incentivised by rising house prices more than the ability to charge higher rents.

Last year, Labour leader Ed Miliband said a future Labour government would introduce mandatory three-year tenancies, with rent rises limited within them.

The Civitas report said: ‘Three years is not enough. The scale of the challenge in the housing market requires more ambitious solutions.’

Source: Inside Housing

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