Introduction of rent controls in Northern Ireland would be counterproductive, a report commissioned by the province’s Department for Communities has concluded.

 

A Private Tenancies Act (Northern Ireland) 2022, which received Royal Assent in April this year, introduced extensive changes to the rules on private renting. Not all will come into effect at the same time and the only immediate change was to the length of notice that landlords and tenants are required to give.

 

But the new law also gave the Department for Communities the power to introduce rent controls. These included the possibility of rent reductions of up to 10 per cent and a rent freeze for up to four years. 

 

However, before activating these powers, the department was required to research and consult on the implications of doing so. 

 

The Chartered Institute of Housing was commissioned to conduct independent research into the matter. And it is its report that concludes use of rent controls as envisaged would only make matters worse. 

 

It is true that some low-income households face rents affordability issues, but ‘it is important to note that much of these affordability issues… have been driven less by rent inflation, and more through punitive aspects of the social security system’, said the report.

 

A survey of tenants did not find, on average, rent to be a particular problem.

 

Overall, a rent freeze or reduction would largely benefit existing tenants who remain in their homes and whose landlords do not sell or repurpose their properties, said CIH. But ‘because such a freeze or reduction would also reduce the size of the sector… other tenants would be evicted’. 

 

The report estimated that introduction of rent controls would result in between 41 per cent and 60 per cent of landlords exiting the market, exacerbating the housing shortage. Some would simply convert their properties into holiday lets.

 

‘A simpler and accurately targeted way to improve housing affordability is topping up LHA claimants with a shortfall to the real 30th percentile rent through discretionary housing payments (DHPs) or welfare supplementary payments’, CIH concluded. 

 

Northern Ireland now has a new renting the frequency of rent increases to once a year. This said the report, has the broad support of stakeholders. ‘It would make sense to monitor and evaluate this new law as part of the normal policy making process’.

 

And, ‘to support this new rent control, a formal process could be developed where renters can challenge unfair rent increases’. 

 

But if greater rent control is considered desirable, another option would be to further limit increases during a tenancy to the rate of inflation, allowing rents to reset to market levels at the end of a tenancy. 

 

‘Limiting increases during a tenancy in this way would seek to address the substantially large increases that occur in a minority of the NI market. Allowing rents to reset to market levels at the end of a tenancy would provide landlords with some assurance that increases in costs would be accommodated in rental prices’, said the CIH report. 

 

But overall, ‘the best way of relieving pressure on prices is by having enough housing supply.