P2P property platforms react to Corbyn’s rent cap pledge
PROPERTY peer-to-peer lenders have mixed opinions on how Jeremy Corbyn’s proposed rent controls would impact the market.
Speaking at this week’s Labour Party conference, the opposition leader pledged to introduce rent controls should Labour win the next election.
“We will control rents – when the younger generation’s housing costs are three times more than those of their grandparents, that is not sustainable,” he told the audience in Brighton. “Rent controls exist in many cities across the world and I want our cities to have those powers too and tenants to have those protections.”
It was a move that immediately provoked ire among some players in the property market, with David Cox, chief executive of the letting agent trade body ARLA Propertymark warning that such a move would slash the number of available properties and cause the conditions of the available rental properties to “deteriorate dramatically”.
John Goodall, chief executive and co-founder of P2P buy-to-let platform Landbay, warned that such a move could be the “final straw” for landlords.
“History shows us that rent controls will only ever have a negative impact on the private rental sector,” he said. “Landlords have already been faced with a number of challenges in recent years and this could be the final straw, causing many to exit the market and leaving thousands struggling to find housing.
“It is time that the buy to let sector was supported, not discouraged, as way of tackling the housing crisis. To help control rental growth we need to focus on where the problem really lies, building more homes to increase stock in line with the ever-growing demand for rental housing.”
However, there have been suggestions that such measures could actually serve as something of a boon for P2P platforms.
Filip Karadagjhi, managing director of P2P buy-to-let platform LandlordInvest, pointed to the example of Sweden which has previously implemented rent controls and which he suggested has a similar housing shortage to the UK.
He argued that rent controls there have caused costs to fall, but noted they have also reduced availability of housing, along with the potential to create a ‘black market’ for the most lucrative properties and areas.
“Rent controls will also impact landlord’s financing options – stricter Prudential Regulation Authority (PRA) rules around affordability will be tougher to meet with rent controls in place,” he added.
“P2P platforms might actually benefit from rent controls as platforms are not regulated by PRA, do not face the same affordability rules and could therefore become a viable financing option to banks and other PRA-regulated institutions.”