Labour rent controls would be a disaster

‘Rent control appears to be the most efficient technique presently known to destroy a city — except for bombing,’ declared Swedish economist Assar Lindbeck in 1971. Lindbeck may have belonged to the political left but he understood basic economic principles. He knew that far from lowering prices, rent controls only lead to disaster.

If only his wisdom was shared by the Labour party, which has commissioned an independent report which calls for rents to be capped for millions of people struggling to pay their bills. The report’s author, Stephen Cowan, is calling for a ‘double lock’ to cap rent increases at either consumer price inflation or local wage growth, whichever is lower. The report also lends its support to the Conservative government’s attempt to prevent landlords raising rents more than once per year and banning ‘rent review’ clauses, which give landlords the ability to hike rents mid-contract.

The review does reject a broad-based rent freeze.