In the private rented sector the level of rent is determined by the market – landlords and tenants haggling. This was not always so. In the 1970s the state was involved with council rent officers saying what a “fair rent” should be. The 1974 Rent Act was passed with the intention of driving private landlords out of business. They were the class enemy. As they sold up Labour-run councils would buy up the properties under the policy of municipalisation. The GLC bought up thousands (which it often then left empty to fall into disrepair.)

So far as their ideological mission was concerned Labour had considerable success. The number of privately rented properties fell from 3.7 million in 1971 to 2.4 million by 1980. It must be stressed that wasn’t an unintended consequence of the policy – that was the policy.

The 1988 Housing Act, under Margaret Thatcher’s Government, restored the market. The private rented sector revived. There are now 4.9 million private rented properties.That liberalisation doubled the private rented sector – from nine per cent to 18 per cent.

Labour’s destruction of the private rented sector also increased unemployment as it restricted mobility of labour.

Now the Labour leader Ed Miliband has proposed a return to rent control. For all the follies of the Blair/Brown years this was never seriously contemplated.

Even since going into opposition Labour has generally resisted demands from the policy from figures on the far left – such as Jeremy Corbyn or Len McCluskey. The Shadow Housing Minister Emma  Reynolds told Channel 4 News in January:

“I do not think rent controls will work in practice.”

She tweeted “to be clear” that it was not Labour policy to introduce rent controls.

Shadow Communities Secretary Hilary Benn, told The Guardian that rent controls would be a mistake as in the 1970s landlords fled the market:

“We don’t want to return to that.”

Clive Betts, Labour chairman of the DCLG Select Committee has said that rent controls are ‘not feasible’. Liam Byrne thinks reintroducing them would be going “too far.”

Labour MP Meg Hillier says:

“I do not mean rent controls as suggested by my Hon Friend. There can be problems with that, as there were in New York, where has there been a black market in low-rent properties.”

Indeed the experience of New York has shown that by restricting the supply rent controls cause higher rents in the long term.

Perhaps Mr Miliband is taking inspiration from Venezuela where rent controls were regarded as the answer to the cost of living crisis. They have failed to avert hyperinflation but have worsened the housing shortage.

Even Communist-run Vietnam recognised the policy was a disaster. Nguyen Co Thach, Foreign Minister of the Socialist Republic of Vietnam from 1980 to 1991, said:

“The Americans couldn’t destroy Hanoi, but we have destroyed our city by very low rents and controls. We realized it was stupid and that we must change policy.”

 So the Conservatives are right to point out what a terrible mistake Labour’s policy would be. But we must go further. We must look term policies to encourage the private rented sector. State owned empty properties should be sold so they can be brought back into use. The tax free allowance of £4,250 on the Rent a Room Scheme should be sharply increased.

While Labour seeks to restrict the housing supply the Conservatives must offer incentives for more property to be made available thus boosting choice and competition. That would not only be good for landlords but also for tenants.

106 comments for: Forward into the 1970s: Labour want to bring back rent controls

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