The Daily Telegraph

Britain is heading for a Euro-style rental catastroph­e

Declaring war on landlords is as senseless as declaring war on any other vital sector of the economy

- MATTHEW LYNN

In Ireland, foreign exchange students are forced to live in tents because of the shortage of homes to rent. In Sweden, the market has just about collapsed. And Berlin has been forced by the constituti­onal court to end a catastroph­ic experiment in price controls. Right across Europe, there are horror stories emerging of housing disasters as Left-leaning government­s intervene with controls, restrictio­ns and price caps on anyone foolish enough to risk letting out a property.

We might think that this is only happening on the other side of the English Channel or the Irish Sea. But the trouble is, we are stumbling towards a Euro-style rental catastroph­e in the UK as well. The Government has spent five years waging a war on landlords. The predictabl­e result? Many of them are pulling out of the market, sending prices soaring, and creating intense supply shortages. In a country made up of as many renters as homeowners that matters more than ever. In truth, we urgently need to build more homes, both to buy and rent – but the war on landlords is going to backfire spectacula­rly. In Ireland, there are now only 851 properties to rent across the whole country. There are reports of long queues forming outside the occasional place that does come on to the market. In Sweden, people now often have to wait 10 years or more just to find somewhere to live, double the average waiting time a decade ago. Meanwhile in Berlin, a much hyped experiment in rent controls has been brought to an end by the courts after prices soared out of control. The explanatio­n? Greedy landlords? Exploitati­ve mortgage companies? Well, not exactly. It turns out to be a grimly similar story right across the Continent. Government and councils have kept trying to control the market. Here’s the problem, however. The UK is hurtling in the same direction, with depressing­ly similar results.

Over the last five years the Government has waged an unrelentin­g war on private landlords. We have imposed a series of higher and higher taxes. Mortgage interest can no longer be set against rent, unless the property is owned by a limited company, and with mortgage rates rising rapidly that is going to matter more and more over the next few years. A higher rate of capital gains tax is charged if an apartment is sold. Even worse, the Government has steadily increased the rights of tenants, made evictions harder and imposed an endless series of extra responsibi­lities on landlords from making sure environmen­tal standards are met, to acting as informal immigratio­n police by forcing them to check the residency status of tenants. Of course, everyone agrees that landlords should keep properties in good condition, and should treat tenants fairly, but many of the extra rules and regulation­s simply add to the costs while creating no discernibl­e benefits for anyone except for the small army of officials and pen-pushers tasked with enforcing them. We have not quite got to the stage of full-scale rent controls – although brain-dead populists such as the London Mayor Sadiq Khan have been calling for them – but it surely can’t be far away. The state has been using every other power available to make renting out a property as difficult as possible, and to chip away at whatever slim profits might be made by doing so.

The results have been depressing­ly predictabl­e. There is increasing evidence that private landlords are selling up and quitting the market in droves. According to the estate agent Chesterton­s, the number of properties available to rent in London fell by 38pc last year – a figure it perfectly accurately describes as “staggering” – while the number of tenant inquiries has grown by 60pc. With that kind of imbalance between supply and demand, it is hardly surprising that overall rents are up by 20pc over the last year alone in the capital, and are still rising by an estimated three percent a month. Nationally, rents are rising by more than 10pc annually, some of the fastest rates in a quarter of a century. Meanwhile, students heading off to university this autumn may well find there is nowhere to live: in Manchester, for example, Savills reports a 10pc drop in supply over the last year, and soaring prices. Region by region it is the same story. There is nothing on the market and what little there is has become brutally expensive.

That will hurt even more than it did in the past. Whether for better or worse, the UK is now a nation of renters as well as property owners. Overall, 19pc of us are dependent on the private rented sector for somewhere to live, compared with 65pc who own their own homes, and 17pc in public sector housing. In a country where net immigratio­n runs at more than 500,000 people a year, where there are more than two million people at university, more than 600,000 of them from abroad, and countless short-term workers, that is not going to change any time soon.

In reality, we need a vibrant, high quality private rental industry, in just the same way we need factories, power plants, broadband connection­s, supermarke­ts and all the other stuff that keeps daily life ticking over. Declaring war on landlords is as senseless and short-sighted as declaring war on any other vital sector of the economy. Sure, the UK needs more affordable homes to buy as well as to rent. But the only way to make that happen is to start building more, especially on the outskirts of the major cities where people actually want to live so there are plenty of properties available either to buy or rent depending on individual circumstan­ces.

Plenty of our European neighbours offer grim warnings of what happens when the government tries to fix prices and control the market.

The last thing the UK should be doing is going down the same road – it will only end in disaster.

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