£170 a week for a shoebox? Don’t shoot the messenger!

June 04, 2014 2:28 PM

A tiny room in Islington crammed with a kitchenette, dining table, wardrobe and double bed has hit the headlines due to its advertised rent of £170 per week. The alarmingly cramped appearance of the room combined with the high rent has been described as "sickeningly small" by Huffington Post and "depressing" by Time Out.

A tiny room in Islington crammed with a kitchenette, dining table, wardrobe and double bed has hit the headlines due to its advertised rent of £170 per week. The alarmingly cramped appearance of the room combined with the high rent has been described as "sickeningly small" by Huffington Post and "depressing" by Time Out.

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Perhaps inevitably, it has led to people saying that the landlord should be ashamed and that the politicians should ban people from being able to let out properties that they think are too small.

 


 

One Guardian writer has even called for "the Thatcherite model" of private renting to be banned. Just like that.


 

Sadly, these commentators completely miss the fundamental point underlying what the sky high rents are telling us. The high price is a signal, it tells us that there is too little space relative to how much space is wanted. It does two things: it tells people to reduce the amount of space they use and it tells people to increase the amount of space available. Instead of addressing the problem (inadequate supply) they're shooting the messenger (high prices).

The problem is that planning is getting in the way of the supply signal. Property owners know they can make lots of money by building more and bigger homes in places like this, where people really want to live. But the planning system stops them. That means all the pressure to match supply and demand is left to the demand side. Prices just rise until the number of people who are prepared to pay enough is whittled down to match the number of available homes.

Making it more expensive by tightening up regulations won't help matters. We need to do precisely the opposite. We need to remove and relax planning restrictions to allow more building in the places where people actually want to live. That means rethinking both the greenbelt and restrictions on how tall buildings are allowed to be as well as scrapping some of the building and environmental rules that increase the cost of construction. The only alternative is ever higher prices and ever more ridiculous property ads.

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