Invest & Fund: What 90s sitcom Friends taught us about rent control
Invest & Fund has turned to cult 90s sitcom Friends to break down the current debate over private rent controls in the UK.
In a blog on the Autumn Statement, the peer-to-peer property lender highlighted the notable absence of any mention of issues faced by renters in the private sector.
While the cost-of-living crisis has prompted some to call for rent caps in the private sector, the government has steered clear of any such commitments.
Invest & Fund highlighted that while rent caps can take pressure of renters in the short-term, they can also backfire in the long run. By way of example, the lender pointed to the large Manhattan loft inhabited by the characters in Friends.
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“If you are unsure what state-backed private rental control looks like, you can think back to the 90s sitcom Friends; that’s how a group of folks in the gig economy managed to maintain the rent on half a million dollars’ worth of Manhattan real estate”, the blog said.
It went on to explain that mayor of London Sadiq Khan has called on the government to introduce a 24-month private-sector rent freeze in the capital, to take the heat off the 40 per cent of Londoners reported to be struggling to pay their rent.
Invest & Fund said that there has been “fierce opposition” to the suggested move from the back benches, most likely hence its absence from the budget.
“The mantra that underpins modern conservatism is growth, and rental caps would reduce the number of landlords in the market, reducing the number of homes, and ultimately shrinking the sector”, the lender said.
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However, Invest & Fund was careful to highlight that while those warning against such a move may be right about the long-term effect on the private rental market, “people struggling to rent their homes is a serious issue, and even though an initial rebuking of the notion of a private sector rental cap is positive for investors, it could easily be seen as callous, after all, Friends wasn’t real, and wealth disparity sadly is”.
That said, the lender argued that there were important lessons to be learnt from America’s private rental caps. “In the short term, these types of caps helped affordability,” it said. “Still, in the long term, they decreased the housing supply and created a spike in expensive rent guarantee insurance that proved counterproductive to renters.”
The positive to be taken from all this, in Invest & Fund’s view, is that “protection of the housing market seems front and centre, and there is a roadmap for growth in place, one in which investors can enjoy the compounding returns they have become accustomed to.”
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