Insane Rent Cap Policy Proves as Disastrous in Ireland as in Berlin

In March this year Sadiq once again asked ministers to devolve him the power to introduce a rent cap in London. Thankfully the government has not acquiesced. We’ve already how badly the policy worked in Berlin, however despite the evidence the London mayor continues pushing for rent controls. Berliners had a miserable time at the hands of their rent cap; real estate analysis revealed it crashed supply by 41% and drove demand up to 172%. It also led to the phenomenon of ‘shadow rents’ where landlords and tenants would agree one rent complying with the cap, and a separate rent significantly above it, sometimes paid in cash.

Thankfully the cap was ruled unconstitutional by Berlin’s courts and scrapped. If Sadiq and socialists still think the cap would do anything to alleviate the housing and renting crisis in the capital they could take a look west to the Republic of Ireland. The country introduced multiple rent pressure zones between 2016 and 2020, with 55 local authorities being allocated the status. In December 2021 those houses inside the zones had rent rises capped by 2%.  Unsurprisingly the rental market has gone exactly the same way as Berlin’s. 

A report commissioned in May this year by the Institute of Professional Auctioneers and Valuers concludes the attempt to control rent rises has “backfired”, with landlords leaving the market and rents rising as a result of the policy. The latest DAFT survey found “The number of homes available for rent across Ireland has dropped to a new all-time low and led to a further spike in rents around the country”:

In Dublin, 712 homes were available to rent at the start of this month, less than one-quarter of the average seen for February over the last two decades.

Outside of the capital, DAFT notes that availability is less than one-third of the pre-pandemic level of February 2020 with 685 homes available to rent.

The average rent nationally now stands at €1,524 per month, an average of 10.3% higher than the same period in 2020.”

This devastating market effect isn’t just seen in statistics, it’s felt in real life. Last week 150 people were photographed queuing for a three-bedroom house in Dublin.

There are now just 716 properties to rent in the whole country according to property website DAFT, with the country’s largest private landlord on Thursday saying he could have recently filled a new apartment block 30 times over. As Einstein said, insanity is doing the same thing over and over and expecting a different result. Is Sadiq Khan insane?

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