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Shadow Chancellor Calls for Rent Controls, But Are They Needed?
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The new Labour Shadow Chancellor, John McDonnell, has attacked the private rental sector.
During his Labour Party conference speech yesterday, McDonnell spoke of cutting the “billion pound tax breaks given to buy-to-let landlords” and called for controls on “exorbitant”1 rents.
However, new figures reveal that rents have barely hit 2008 levels across many parts of the UK.
Recent data from Belvoir letting agents shows how affected landlords’ rental incomes were during the recession, and how little they have recovered since.
Shadow Chancellor Calls for Rent Controls, But Are They Needed?
In 12 counties where Belvoir has had offices since the beginning of the recession, average rents are still below 2008 levels.
Analysis of these branches shows that average rents in the second quarter (Q2) of this year surpassed the record high of Q3 2008 by just £6 per month.
Additionally, the 2008 peak was not hit again until Q4 2014.
The lowest rents in the past seven years were recorded in Q3 2009, at an average of £670 a month.
In Q1 2015, rent prices reached £710, but dropped to £708 in Q2.
For all Belvoir offices, including new ones, the average monthly rent for the second quarter of this year was £756.
In London, the story is completely different, with rents standing much higher than in 2008.
In 2008, the average monthly rent in the capital was just under £1,200. Although they fell slightly the following year, by Q4 2009, they had surpassed 2008 levels.
London rents continued to increase irregularly, hitting a new peak of around £1,700 per month in Q1 2012.
In Q2 this year, they dropped again, to an average of £1,460.
Dorian Gonsalves, Director of Commercial and Franchising at Belvoir, comments on the data: “The Belvoir quarterly rental index, which is prepared by property analyst Kate Faulkner, has picked up rises in rents in most places across the country since Q4 2014, but contrary to media reports, these are far from extortionate or spiralling out of control.
“Belvoir’s data shows that in 12 counties where Belvoir has been trading for the last seven years, Q2 2015 average rents have still to recover to the highs of 2008. These include Cheshire, Dorset and Northamptonshire.
“In contrast, inflation has risen by 19.17%.”
He continues: “The number of Belvoir counties that exceeded the 2008 rental highs during Q2 2015 was 19, and these include Bedfordshire, Worcestershire and Wiltshire.
“Unsurprisingly, the highest increase over this time was in London, where rents have increased by 22% since 2008, in line with inflation.
“However, in the East Midlands, rents are still 2.5% lower than they were in 2008.”1
