The Green Taliban have come out with a housing policy that is surprisingly right wing in some areas. They support a rent to buy scam where tenants can buy their state house. In theory this is very right wing, but in practice almost always turns out to be a bum deal for the tenants.
In the second major part of their policy they revert to type revealing they are still statists intent on controlling every aspect of people’s life.
And like most Opposition policies, the Green Taliban’sloopy idea forÂ rent controlÂ sounds good until you scratch the surface.
“This policy, meant to assist poorer residents, harms far more citizens than it helps”
They’ve ripped this policy off from theÂ Green Taliban in the UKÂ which announced it last year.
To be fair, rent control has had mixed resultsÂ in Europe, and for places like GermanyÂ it has meant fewer Germans feel the need to buy their own home.
“Therefore, only 43% of German people own their house (the lowest in Europe)”
This paperÂ (a bit dated now, but with luminary Milton Friedman as a contributor) makes some really interesting points both in terms of the housing crisis campaign, and the impacts of rent control:
From the point of view of the politically orientated policy maker, rent control has everything to offer. It silences (at least for a time) the noisy activists, it shows that the government is doing something about the housing crisis, and often as not it wins the political support of a large fraction of the voting public (over half of the households inmost urban areas are tenants). Moreover, rent control does not involve the use of government resources and hence doesn’t “cost” the government anything.
Tenant activists generally do not start out from the premise that “we must first ascertain the facts.” Quite the contrary.Â The objective of the tenant activist is to create a sense of crisisâ€”to make policy makers and other tenants believe that the situation is truly desperate. A book entitled Less Rent More Control, which is “about rent control… and how tenants can organize to win and enforce it,” advises:
“Even if you can’t get good statistics, it’s often helpful to publicize specific cases of families paying a large portion of their incomes for rent.” Â “Stories about specific families who are suffering from the housing crisis can be very useful in bringing statistics to life and in getting publicity for the rent control campaign.”
And we are seeing this for sure in the media here..with Campbell Live and the Herald campaigning for and on behalf of the Labour and Green parties.
The media for its part, always happy to advance the causeÂ of the underdogâ€”an admirable objective taken by itselfâ€”willingly cooperates in making notorious the plight of the underprivileged.
But does rent control help with a housing crisis…ermmmm…no it doesn’t:
Rent control worsens housing “shortage”. Â Rent control makes rental housing relatively cheaper than it would otherwise have been. Accordingly, it increases the demand for housing. At the same time it reduces the profitability of investment in rental housing and hence reduces the supply.
With forcibly lower rents landlords have little interest in maintenance:
Rent control causes deterioration of the housing stock. Â Faced with a rate of return on investment that is too small, many landlords recoup their losses on a current basis by allowing the physical stock of houses to depreciate at a faster rate. That is, regular maintenance and repair is neglected.
It’s just another tax:
Rent control redistributes income in haphazard fashion.Â Rent control is a form of tax that is levied on landlords, the proceeds of which are given to tenants. The amount of tax and subsidy varies according to the difference between the market rent and the controlled rent.
In large cities the effects of rent control could see large drops in the value of the rating system, as property values slump. Rates are aligned with values.
Rent control shifts the incidence of property taxation. Â Rent control reduces the value of rental property.
Basically, in short simple words…Rent Control doesn’t work, ensures sums develop, and destroys value….yeah, no wonder the Green Taliban are keen on this.