Relief for investors as Gove rules out buy to let rent controls

Rent controls as currently in force in Scotland and under consideration in Wales will not be put into effect in England, the government has made clear.

In a letter from Housing Secretary Michael Gove to the all-party Select Committee on Housing, Gove rejects a call for Valuation Office Agency data to be made public so some form of assessment could be made as to what constitutes “a justified rent increase.”

He says: “Rents in the private rented sector should be agreed between landlords and tenants, and it is not for government to intervene in this. We are clear that landlords must be able to raise rents in line with market prices, but that rent increases which are significantly above this should not be used as a means of backdoor eviction.

 “Where there are disputes between a landlord and tenant, the First-Tier Tribunal is best placed to resolve these and to determine the market rent. Making a balanced judgement on what the market rent is means a number of different factors need to be taken into account, such as quality of fixings or proximity to amenities. 

“The Tribunal has experts who can assess the true market value of a property, and it is for those individuals to determine which evidence is relevant. We will update guidance to support all parties in engaging with the Tribunal.”

The Select Committee - which does not make policy but consists of MPs from across the Commons who scrutinise government policy - also calls for the government to “stipulate by how much rents will increase” and to initiative mandatory break periods during which tenants could appeal to the First-tier Property Tribunal if they think their rent has risen above local market rents.

 Again Gove rejects this approach , saying it is right to abolish rent review clauses, and says: “The government wants to avoid very large rent increases being used as a backdoor to eviction, while ensuring that landlords can increase rents to market prices.

“In the new system [under the Renters Reform legislation, if it becomes law] landlords, as they can now, will be able to increase rents once a year at the rate they deem appropriate. It is only if a tenant thinks this is above market levels that they can challenge this at the First-tier Tribunal. When this happens, an independent expert panel will assess the market price for the property. This could be higher, lower or in line with what the landlord set.

“The government is clear that rent should be agreed between the landlord and tenant, and nothing in our proposals prevents parties negotiating as they do now. It is not for government to set or steer rent increases and we do not support the introduction of rent controls. Evidence suggests that these would discourage investment in the sector and would lead to declining property standards as a result, which would not help landlords or tenants.

“Rent review clauses can provide a means of backdoor eviction through removing the right to challenge above-market increases and may reduce flexibility for landlords to respond to market changes.”