Private renters across the UK have had a wild ride in the 2020s. The onset of Covid-19 and mandated social isolation prompted media outlets to herald a mass exodus from the hubs of London, Manchester and Edinburgh and the end of cities altogether. Many middle-class residents vowed never to return after finally becoming free from their exhausting commutes to enjoy the perks of working from home. Rents plummeted by up to 15 per cent across all major cities, and those who stayed put swooped to claim the unprecedented deals available on the rental market.
Two years on the future predicted in 2020 could not be further from our present reality. People returned to cities and private rents now vastly outstrip pre-pandemic levels. Private rental costs in inner London boroughs increased by 20 per cent in the first quarter of 2022 and in the year preceding June 2022 rental prices grew in Scotland by 3.5 per cent, England by 2.5 per cent and Wales by 1.9 per cent. Landlords across the UK have sought to recoup losses in passive income while our asset-rich economy enjoys a boost in house prices that leave those of us in “generation rent” further from homeownership and with an increasing chunk of our pay contributing to someone else’s mortgage.
Eye-watering hikes in private rents are now not only experienced by those of us living in cities. While many have returned to urban dwelling, a lot of people actually took up the offer to “move somewhere else if you don’t want to pay that much!” Those in towns and the countryside, whose close-knit communities have been dispersed with the infiltration of Airbnbs and other short-term rental properties, now understand what city-dwellers have been saying for years: we are suffering at the whims of a market that serves to make the multiple-homeowning class unimaginably wealthy and the rest of us increasingly miserable.
There is, however, a sensible policy solution to our highly variable housing market: the introduction of rent caps to cover the entire private rental sector. In contrast to the current predicament of spiralling costs for an increasingly poor quality of homes, to the benefit only of those who own them, the prices set in the private rental sector under a rent cap would reflect a home’s size, location, amenities and the year in which it was constructed. This transition would bring us closer to fully realising the primary function of a home as a place to live, rather than an asset to generate wealth for those with access to the vast sums of capital required for multiple mortgages.
We need not look far for successful applications of rent caps. In 2020 rent caps were introduced in Berlin and in areas experiencing the most acute housing pressures in Catalonia. While those rent caps were ultimately struck down due to an overreach of constitutional powers, they provided us with an opportunity to witness the reorientation of housing towards its use value rather than its exchange value on an unregulated and speculative market. As a result, Berlin was the only major German city to record a rent decrease in 2020 and intervention areas in Catalonia experienced a 6 per cent rent decrease compared with control areas.
Opponents of rent caps often diagnose the UK’s housing crisis as reflective of a shortfall in supply to meet the growing demand for homes. While data from Catalonia showed that rent caps had no effect on housing supply in areas of intervention, these critics are correct: we do have a housing shortage in the UK that rent caps will not fix. So perhaps we could also take more inspiration from Berlin, where laws exist to increase housing supply by regulating the short-term rental sector and outlawing empty homes (both of which are abundant in the UK). Or we could also expropriate homes from the UK’s largest homeowners, which Berliners voted in favour of in a referendum in autumn 2021.
[See also: Who made more last year: you or your house?]
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