Will NZ Labour follow UK Labour with rent controls?

May 13th, 2014 at 2:00 pm by David Farrar

Fraser Nelson writes in the Daily Telegraph:

Something very strange has come over senior members of the Labour Party. Thoughtful, sensible, well-educated men and women are starting to behave like excitable, angry, slogan-chanting teenagers. A party that had gone through the painful process of modernisation in the Nineties, and made itself into a party of competence, now seems gripped by nostalgia. Not so long ago, Labour led the European Left in pioneering reforms of government – but that Blair-era generation has gone from the stage. In its place stands a group of people too young to remember the Seventies, yet seemingly dedicated to repeating its mistakes.

The latest to turn is David Lammy, a Harvard-educated lawyer who was a health minister under Tony Blair at the age of 29. A few months ago, he proposed an idea for London: rent controls, where the government lays down terms to landlords. There is a “patently obvious” demand for such controls, he said, because it’s so costly to rent in the capital. So landlords can be told not to charge so much. No one took the idea very seriously: after all, since when could government order lower prices? Wasn’t that kind of thing tried in the Soviet Union with, erm, mixed results?

But yesterday, Ed Miliband declared that he likes the idea so much he’ll roll it out nationwide. 

Muldoon tried rent controls. They were a disaster, along with his price and wage controls.

NZ Labour policy is for rent controls in Christchurch. Never mind this will stop new properties being built. Will NZ Labour propose rent controls nationwide? Don’t roll it out – many of their policies come from the UK Labour Party.

Mr Miliband’s strategy is, anyway, perfectly defensible. A populist wave is sweeping Europe at the moment, as demonstrated by the rise of Ukip in England and the SNP in Scotland. He is hoping it might also last long enough to sweep him into 10 Downing Street. Politicians can win easy applause nowadays by raging against the “establishment”, and accusing their enemies of being out of touch. In many ways, Mr Miliband seems to be positioning Labour as the Ukip of the Left; an angry party itching to exact vengeance on a growing list of enemies, inviting voters to blame their problems on corporate greed.

Sound familiar?

The economist Assar Lindbeck, a housing expert, once said that “rent control appears to be the most efficient technique presently known to destroy a city – except for bombing”. Who would have thought that this policy would be on a Labour Party manifesto in the 21st century? 

Watch this space in NZ.

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21 Responses to “Will NZ Labour follow UK Labour with rent controls?”

  1. thePeoplesFlag (222 comments) says:

    “…Fraser Nelson writes in the DAILY TELEGRAPH…”

    Concerned trolls gonna troll.

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  2. artemisia (225 comments) says:

    Rent control by stealth in NZ? The rental warrant of fitness, currently being piloted around NZ, will add a significant cost burden to landlords, many thousands of dollars depending on the circumstances. Now normally such costs would be passed on to tenants in increased rents. Or maybe not ….

    Here’s an excellent piece of analysis from LaLaLand (otherwise known as Solutions to Child Poverty in New Zealand: Evidence for Action, prepared by the Children’s Commissioner’s Expert Advisory Group on Solutions to Child Poverty):

    “Implementation planning should carefully consider how to mitigate the risk of costs associated with improving the quality of rental housing, which is required by a Warrant of Fitness, being shifted on to tenants.”

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  3. Nick R (500 comments) says:

    They have rent control for a lot of properties in New York. Obviously, the city is a struggling benighted mess that nobody would ever want to visit or live in, and nobody invests there. Let’s never be like that!

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  4. burt (8,030 comments) says:

    Muldoon tried rent controls. They were a disaster, along with his price and wage controls.

    It will be different when Labour do it !

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  5. xy (169 comments) says:

    One day, San Francisco will cast aside rent control and become a prosperous city – perhaps it could attract some tech companies once that happens.

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  6. dime (9,666 comments) says:

    Rent Control worked for Lemmy. Lives in Hollywood happy as..

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  7. burt (8,030 comments) says:

    National need to make some serious changes to taxation and benefits such that at least half the people in this country actually have a real concern for how politicians spend tax payers money.

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  8. dime (9,666 comments) says:

    xy – how come i read articles of people attacking google buses etc. pissed off that they can no longer afford to live in san fran?

    let me see, you own an apartment in san fran, its rent controlled. you paid 500k, you get a shitty return, oh i know! flick it for 3 million and walk away done.

    san fran can still say they have rent control.. as their stock goes down by the day

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  9. James Stephenson (2,093 comments) says:

    They have rent control for a lot of properties in New York.

    Yeah, about 50% of them, but they never come up for rent because if you manage to land one you never leave…which, guess what, puts more upwards pressure on the rest of the market.

    The place certainly fits my definition of a benighted mess one would never want to live in.

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  10. unaha-closp (1,140 comments) says:

    Politicians can win easy applause nowadays by raging against the “establishment”, and accusing their enemies of being out of touch. In many ways, Mr Miliband seems to be positioning Labour as the Ukip of the Left; an angry party itching to exact vengeance on a growing list of enemies, inviting voters to blame their problems on corporate greed.

    Couldn’t happen to a nicer bunch:
    - The UK government has spent about $trillion inflating the FTSE and the price of London property.
    - The EU buys Greek debt by the barrel load, whilst bailing out banks to infinity and beyond.

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  11. coge (181 comments) says:

    Rent controls will reduce the number of properties for rent. Basic economics. Thanks Labour!

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  12. Ed Snack (1,798 comments) says:

    Actually it’s simple, the appeal is the old “We’ll take money from other people and give it to those who vote for us”. Plus it has the “aren’t we generous giving all this benefit (but don’t mention that we’re being generous with other people’s money, but, hey, they don’t deserve it anyway)”.

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  13. Bob (495 comments) says:

    I can only speak about Muldoon’s rent freeze which didn’t work. Rents had to be held at the level they were on the day controls were introduced. However when tenants changed rents could be increased because the new tenants didn’t know the previous tenants. Registering every house or sending a large team of inspectors around wouldn’t have worked. Eventually the rental housing stock would have dwindled. Who wants to own property where your income is deliberately curtailed? Who wants to maintain property which doesn’t bring in enough rent?

    It is better to encourage investors to buy houses and reduce prices through competition and a plentiful housing stock. I know from experience that if you charge too much tenants won’t stay.

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  14. OneTrack (2,818 comments) says:

    DPF – Stop giving them silly ideas.

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  15. SPC (5,473 comments) says:

    Rent controls would encourage landlords to sell to owner occupiers. A short term downward pressure on house prices, requiring a medium term policy such as Kiwi Build to maintain supply of new housing.

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  16. Ed Snack (1,798 comments) says:

    SPC, encourage is the wrong word, coerce through threats of state controlled violence is more accurate. I’d recommend more a “Kiwi Hands Off” policy as far superior, and a “Kiwi keep your bloody government fingers off my property” policy as an extra.

    People will get themselves housed without significant intervention if you create the right conditions. Excessive regulations are what creates the wrong conditions, and adding more regulations to regulate the regulations you already have, is not just a tongue twister but a form of bureaucratic insanity.

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  17. peterwn (3,214 comments) says:

    Yes, UK has rent controls, and long term security of tenure is necessary to stop rent controls being circumvented. UK has the problem of people being paid housing supplements/ allowances for houses larger than they need. Hence the ‘bedroom tax’ there ie being paid an allowance for the size of house actually needed. Options are downsizing – difficult with tenure making suitable houses as scarce as hens teeth, or taking in a lodger to occupy the spare bedroom – with resultant extra work, loss of privacy and risk of lodger being a ratbag – not everyone is like the hard nosed 20 watt (the size of bulb boarders are allowed) landlady.

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  18. wf (400 comments) says:

    Rent controls: no. But I do have a problem with landlords charging top dollar for rental properties which are substandard by today’s standards.

    Landlords do have a perceived social obligation to provide a healthy environment in return for the rent they charge, so a dry, well maintained property should be the minimum standard required, no matter where it is, or who the tenants are.

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  19. simonway (375 comments) says:

    Yes, I would favour expansion of state housing over direct rent controls, but New York has obviously not been “destroyed”.

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  20. burt (8,030 comments) says:

    Social engineering … the lefties just can’t help themselves can they. It’s not enough to set minimum levels of income, bring in the 40 hour week, mandate minimum standards of workplace safety etc. All good stuff right… Definition of minimum terms and conditions for employment, great.

    But no … it’s not enough… They need to control the whole bloody thing. Some grand socialist la la land dream where the state is the sole provider and funder of all the things the happy comrades need. The nasty private sector to be moulded and shaped to match the rhetoric of an unsustainable ideology.

    Muldoon was bat shit crazy enough to try this sort of heavy handed intervention, I’m staggered that Labour here would even consider repeating the old drunkards roads to ruin.

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  21. burt (8,030 comments) says:

    Speaking of which, didn’t Winston’s bullishness take you back to the good old Muldoon days;
    http://www.stuff.co.nz/national/politics/10038917/Peters-kicked-out-of-Parliament

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