Would Manchester rent controls mean fewer rental homes in the city?

Author: Rent Guarantor

21/10/2019

Following in-depth research into housing in Manchester and how affordable – or not - it is for the young people who live there, a new report has identified a number of ways to help young people afford to live in the city, with a form of rent control among the recommendations. However, following the publication of the report, some concerns have been raised that any form of rent control could hurt the supply of private rental sector properties.

A recent report from The Royal Society Arts and One Manchester has researched, analysed and assessed the supply of affordable housing in the city compared with what young people living there need. Among the various recommendations it makes to help improve the housing, personal and economic security of young people in Manchester, is the introduction of rent pressure zones, a form of rent control.

Why are rent controls needed in Manchester?

The research conducted by the two bodies found that for young people, their personal security, economic security and housing security are all intrinsically linked.

If stated that with so much of the affordable housing available to buy in Manchester still too far out of reach for the majority of young people who live there, many of them must turn to the rental sector to live independently. However, with not enough social rental properties available, the PRS is where many of them must live and with rents still rising – along with demand – this too is an expensive option.

There were a number of recommendations in the report, to help tackle this and create options for young people to be able to afford to rent or buy a home in Manchester. They include to create a special Housing Affordability Deal that would allow the Greater Manchester Combined Authority to:

  • Develop its own definition of affordability across the city region.
  • Redraw Broad Rental Market Areas (BRMA) boundaries and set its own rates for the Local Housing Allowance (LHA).
  • Invest in new developments and housing products such as Shared Ownership; Rent to Buy and Escalator Ownership schemes.
  • Curb steep rent increases in particular neighbourhoods through the introduction of Scottish-style rent pressure zones.
  • Offer greater support for community-led, in perpetuity schemes through Community Homes Zones in areas with high levels of vacant properties.

“The inaccessibility of the housing market across all three major tenures, compounded by wider economic insecurities, leaves young people with few guarantees that they will ever be able to achieve their housing aspirations,” the report states. “Each recommendation contributes to the creation of a housing market that works for all young people, providing them with accessible and affordable housing options across both ownership and rental markets.”

Rent controls could weigh on PRS supply

However, while the report recommends a form of rent control as part of a series of ways to support young people wishing to live independently, the RLA has shared its view that such a move could end up being detrimental to the availability of rental homes.

“Rent controls are on the face of it an attractive but simplistic and populist approach to the increased cost of housing,” said the RLA’s policy director, David Smith. “In reality they make the situation for tenants worse. All the evidence from around the world where they have been introduced shows that they reduce supply and drive up the cost of housing.”

“Instead, the Mayor of Greater Manchester needs to work with the private rented sector on how to boost the supply of homes for rent to meet ever growing demand,” Smith said.

This view comes even though the report suggests a rent pressure zone form of rent control which limits the rate at which rent level can rise in certain areas, rather than placing an actual cap on rents. While it can be worrying for landlords that rent controls are a possibility that could damage their business, it’s something that could be welcomed by tenants.

However, there are other options to help balance landlords and tenants’ needs. Among them is encouraging more landlords to request rent guarantors from their tenants. That way, even if it would make sense to charge a slightly lower rent to open their property up to more potential tenants, with a rent guarantor agreement, you gain a guarantee that the rent will be paid, no matter what your tenant ends up going through.

Of course, Manchester isn’t the only UK city where affordability issues are hurting young people’s opportunity to live independently, but it’s good to know there are ways to change that, ways that would work for tenants and landlords, both.