Richard Boyd Barrett: Supply won't bring rents down, calls it fantasy
Richard Boyd Barrett challenged the minister over the claim that increased housing supply will reduce rents. He dismissed the idea as "total fantasy," arguing rents will not fall and current levels are unsustainable for tenants.
Key challenge to supply argument
He pressed the minister to explain when greater supply would lead to lower rents, saying this outcome has not occurred except briefly after the crash and calling the expectation a total fantasy.
Investor pressure and rent controls
He cited the minister's earlier statement that long-standing tenancies should not fall behind the market and said investors use that position to demand weaker rent controls. He quoted investor pressure to remove controls because they limit the ability to charge £2,500–£3,000 a month and therefore supposedly deter building.
Affordability example
He gave an affordability example of an average rent of about €2,500 a month (roughly €30,000 a year) and asked whether such levels are reasonable or sustainable for people in the capital city, questioning how tenants are supposed to pay those rents.
Landlord numbers and profits
He rejected the government's suggestion of a large landlord exodus, noting that landlord numbers and tenancies increased into 2023 and that the private rental sector has grown. He argued the net increase in landlords is driven by large profits made from what he described as extortionate rents.
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Most of the points have been made about these amendments, but I do want the Minister to try and explain, at what point does he seriously believe the supply that he's talking about is going to lead to a reduction in rents? Could you give us some indication? I think it's total fantasy. You yourself, in the explanatory manner of random for the Bill and in the speech that you gave introducing the Bill, said that long-standing tenancies, the rents shouldn't fall behind the market. That's what you said. In other words, and that's what the investors want. They're saying, if we have to deal with rents that are lower than the market, we're not going to build, because your rent controls are too restrictive as far as we're concerned. They limit our ability to charge £2,500 or £3,000 a month. Therefore, we want you to get rid of them in order to incentivise us to come in and build. Are you honestly saying to me that if you do this, that at some point, and I'd be interested to hear when you think this point is going to arrive, because it's never happened before, except the crash, and even then it didn't really happen for very long, but that rents went down. Briefly, it did after the crash, but briefly, it did after the crash, when rents are going to come down, and if you can't give us that date, and probably if you even think about that question, the likelihood that it's ever going to happen is just, is total mirage, it's total fantasy. Do you honestly believe that an average rent of, say, €30,000 a year, €2,500 a month, which is about €30,000 a year of after-tax income, of after-tax income, which you have to pay in rent, that that's a reasonable level of rent to have in the capital city, for example? Do you actually think that's a reasonable level of rent, and how do you think people are supposed to pay that? Because I know very, very few people who think that's a sustainable rent. The last point I do just want to make, because we've had a long debate on this amendment, is the mythology. Why does the government keep recycling the mythology that we've a big exodus of landlords? There's not a big exodus of landlords, there has been an increase in landlords, in 2023, there was a hundred and, I'll just get the figures, there was a hundred and one thousand landlords in the country. End of 2023, sorry, all right, end of 2023, okay, right, I haven't got the right figures here in front of me, but in any event, the number of landlords has increased since 2023. And the number of tenancies has increased, so the private rental sector has increased, and the number of landlords has increased over the last two years. So, if your argument is that unless we do this, you know, there's going to be a continued exit, I suggest to you, Minister, that there's a problem with your logic, because, in fact, we haven't had, there might, there might be some leaving, but there is a net increase in the number of people. And the reason there is, is because there's huge profits being made by people who are landlords. And how could there not be huge profits being made when they are charging the sort of extortionate rents that currently exist out there in the market? Thank you very much.
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