Labour’s Proposal to Link Rent to Inflation Bad for Tenants

Labour’s proposals to link rent increases and inflation would lead to a decline in tenant finances, according to a statement from the RLA (Residential Landlords Association).

The RLA spoke out in relation to the Office for National Statistics’ (ONS) index of private sector rents, which was released earlier this week. The ONS index found that private sector rents increased by 1.1 per cent in the year until January 2018. In London, this growth was more subdued, rising by just 0.2 per cent.

However, over the same period of time, inflation as measured by the Consumer Price Index stood at 2.7 per cent. When measured by the Retail Price Index it worked out at 4.0 per cent, both figures significantly higher than current rental price inflation. This led to the RLA expressing concern about Labour’s plans.

The figures show that calls by the Labour Party for rents to be linked to inflation could lead to many tenants being worse off as a result of the change. The policy would therefore have the inverse effect in comparison to its intention to make the private rental sector more affordable for tenants.

The RLA also stated that the figures highlight that social sector rent increases, which are currently based on CPI plus one per cent, are growing at a proportionally higher rate than those in the private rental sector.

RLA policy director David Smith spoke out about the claims, suggesting that the government should be less concerned with punitive rent controls and more concerned with the impact: ‘Rent controls are unnecessary and would act against the interests of tenants by making them worse off. Rent rises would be even lower if it was not for the punitive tax increases which the government has imposed on the sector and which will begin to bite far more over the coming years.’

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