Commentary: Labour's Plans For Rent Controls And Banning Fees

Our own opinions on the matter don't matter, especially since it's been done to death by much better minds. Amazingly the notion that rent controls are unhelpful seems to be one of the very few things that economists on both the left and right of the political spectrum agree on.

In the red corner well know leftist economist Paul Krugman:

And in the blue corner the free market Cato Institute:

The pragmatic bottom line is of course how much profit-sapping interference landlords will bear before they give up and go and do something else. There will come a point where it's just not worth carrying on, but that point is going to be very different  for each landlord, and we know plenty who have the water level just under their nose as it is and who are just an interest rate rise (or rent cap!) away from folding. At the other end of the scale there are many who could swallow a large percentage reduction in profit and still carry on just fine.  However even the loss of these 'weak holders' is still going to reduce the choice for tenants unless someone else steps in to take up the slack. The question is 'who'?

Regarding letting agent fees it must be obvious that if these get 'banned' they will reappear in some other form that the legislation does not cover. However it seems that a large portion of the public favour fee banning and rent controls, so if Labour get elected in May we will have a chance to find out how they pan out...  

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