Rent controls could be brought in across the whole of London to tackle the ‘affordability crisis’.
However, the critics were lining up after Mayor Sadiq Khan said yesterday he will develop a new blueprint for stabilising or controlling private rents in the capital.
If the Mayor himself cannot bring in rent controls, he will demand that the Government does, with a precedent likely to be set for elsewhere.
His announcement came as new polling carried out by City Hall and YouGov found strong support for rent controls, with over two-thirds (68%) of Londoners in favour.
Only 16% were against, while the remainder had no opinion.
Khan argues that between 2005 and 2016, average private rents in London rose by 38%, and that over a quarter of Londoners (27%) now rent.
According to the Valuation Office, renters in London pay more for a one-bedroom home than tenants elsewhere in England pay for one with three bedrooms.
Khan has invited Karen Buck, Labour MP for Westminster North, to work with London deputy mayor for housing James Murray to develop proposals for rent stabilisation or control laws.
If rent controls are to be introduced in the capital, a precedent could be set for England and possibly Wales, which like Scotland has devolved housing powers.
In Scotland, new laws allow councils to implement ‘rent pressure zones’ where rent rises are capped at no higher than inflation.
Khan, who has already said he wants to see the end of Section 21, or ‘no fault’ evictions, appears to accept that as Mayor he may not have the powers to bring in rent controls.
Yesterday he said that if this is the case, he will campaign and lobby for changes to be implemented by the Government.
He said: “London is in the middle of a desperate housing crisis that has been generations in the making. At City Hall we are doing everything in our power to tackle it, but I have long been frustrated by my lack of powers to help private renters.
“The arguments for rent control are overwhelming, and Londoners overwhelmingly want it to happen. It’s vital that the Government acts.”
Karen Buck, who introduced the Homes (Fitness for Human Habitation) Act 2018 as a Private Member’s Bill, said: “We need an approach to rent stabilisation and control that works in London, and I am very pleased to be working with Sadiq’s team to develop a blueprint for what Government should do.
“Once we have set out these proposals, we will argue the case that ministers must support London’s private renters by putting our plans into action.”
Hannah Slater, policy manager at Generation Rent, said: “We applaud the Mayor’s commitment to explore how rent controls can work to provide Londoners with stable and affordable homes.”
However, critics of Khan’s rent control plans are already warning against such a plan.
David Cox, CEO of ARLA, said: “Rent controls do not work; they hits hardest those designed to help the most, and political parties advocating such systems have failed to learn the lessons of history.
“The last time rent controls existed in this country, the private rented sector shrunk from 90% to 7%.
“At a time of demand for PRS homes massively outstripping supply, rent controls will cause the sector to shrink.
“In turn, this means professional landlords will only take the very best tenants, and the vulnerable and low-income people that rent controls are designed to help, will be forced into the hands of rogue and criminal operators, who may exploit them.”
John Goodall, CEO of buy-to-let lender Landbay, accused the mayor of “grandstanding”.
He said: “Rent controls are likely to lead to a reduced investment into the rental sector and thus a further shortage of high-quality rental accommodation.
“That will not lead to a positive outcome for London’s renters as they will find it harder to find decent properties.
“The Mayor should be looking to find ways to encourage investment rather than political grandstanding that will end up harming those that he claims he is trying to help.”
Chris Norris, of the National Landlords Association, said: “It is frankly bizarre that the Mayor of London should choose to develop a blueprint for stabilising rents.
“It is equally odd that the announcement justifying the decision should be based on rent data for 2005 and 2016, when according to the Mayor of London’s own housing data, private rents in the capital have dropped consistently from 2016.
“In the year to July 2018, private rents in London fell 0.3% compared to an average increase in the rest of England of 1.6%. When adjusted for inflation (as published by the Mayor’s team) this equates to a real-terms fall of around 2.25%.
“It’s often assumed that high rents are the product of landlords’ greed rather than market forces. However, housing costs are seen as relatively high because wages have not kept pace with the cost of supply. Capping the rent which can be charged will alter neither of these factors.
“Artificially suppressing rents sounds like an easy solution, but it would be counter-productive and fails to address the root causes of a lack of affordable housing.
“History shows that rent controls stifle the supply of housing and reduce the money available to a landlord to maintain their properties. That benefits no one.”
The Residential Landlords Association said: “All evidence around the world shows that where forms of rent control are in place, decoupling prices from the value of properties hurts both tenants and landlords.”
Comments (22)
This move will be widely welcomed across London. It will also help the process of downwards adjustment of prices which is necessary for London’s continued economic success. Well done Mr Khan!
Will2 has got it just right, it’s vote purchasing, but instead of paying tax-payers money to a Political party, their using landlords income to buy votes from Tenants.
When will Tenants wake up to the REASON behind rent increases has been the incessant and unco-ordinated meddling by ad hoc legislation in the PRS, from Tax raids, to Licensing. The Min room sizes are responsibile for reducing Housing and increasing rents,
helloooo tenants.
Thanks for your observation. The public are generally not able to realise what is happening. Thatcher was a clever lady as council tenants purchased there heavily discounted homes it changed many to become conservatives as they were now land owners! We are now seeing Corbyn playing the same game in reverse. As your every day communist believes property is theft. I understand how corbyns virgin voters can be easily attracted. A socialist pied piper – hope they mind out for the river!
I am a homeowner, however, I can understand from a renter’s point of view that London rent is getting out of control, although as a manager for a London Estate Agent, I do not think rent control will be practically possible to implement for a number of reasons. What needs to be addressed and regulated is the AirBnB market as this indirectly impacted on the PRS resulting in a rise of rent in London and elsewhere. There are unscrupulous landlords using AirBnB and other similar sites renting out their property on a short term basis i.e. holiday let etc to make quick time money but at the expense of breaking the threshold income set, time limit as well as breaching property licence (if the property is in a licensable area).
This is the direction it will drive landlords towards. Airbnb is a high risk and potentially high maintenance/high admin course. As the decent landlords are screwed by politicians this is where landlords will go or invest abroad in holiday accommodation and reduce everyday accommodation driving up rents even further or reduce supply. Look at history and the 1977 rent act to see how supply plummets!
Berlin has introduced rent controls. One of my clients described the following to me. He owned 3 properties in Berlin. All refurbished to a high standard and let at a market rent. From my experience as his agent in London, he is an excellent landlord. In Berlin a tenant moved into one of his flats and on the second month failed to pay the rent and lodged an appeal to the property tribunal, claiming that he was paying far and above the market rent for the area and accommodation. The tribunal found in my client’s favour. However, even if the tenant’s claim has no merit, the Landlord cannot reclaim costs. Landlords are normally legally represented because of the technical nature of property law in Germany. Meanwhile, rent payments are suspended until the case is heard and adjudicated. When the tenant received a demand to pay all of the suspended rent in full, he promptly absconded. It is apparently an increasingly common practice there. My client sold his properties in Berlin. In Germany, the climate seems to be that landlords are automatically regarded as guilty unless proven otherwise, even in the case of vexatious claimants.
Your last sentence is the road we are going down.
‘Rent controls are the best way to destroy a city apart from bombing it’
– Socialist economist Assar Lindberg
you could also force thousands of diesel car owners in suburban London to buy new cars in 2021 or pay £12 a day! To go within the north/ south circular roads! Khan will upset so many when the penny drops!
I think Khan should have followed in his father’s footsteps, as a Mayor of London he’d make a good bus driver.
not sure, I have a feeling he would have got lost
He’d need to take a test of competency.
Capping doesn’t increase the availability of properties that are needed for rent. If he is that concerned over rents values for social tenant’s then he would find is far better to build suitable homes and set his own rent cap in competition with the private sector…. oh dear back to that one again…. its not profitable to build, so lets steal and control the private sector.
Great idea. The Govt has already sent buy to let demand off the cliff and now those landlords that haven’t sold up but stayed in the market won’t be able to get market rent.
Still that’s ok, I’m sure their lenders will keep their rates below what the market dictates.
Tell you what why don’t we go the whole hog and have longer rental agreements? That’ll push back what little increase they are allowed further? Oh, wait a minute . . .
They will be able to get “market rent”. Market rent will just be significantly lower.
Perhaps Hannah Slater should get her mate Sadiq to build loads of social housing to replace the social housing asset stripped and sold in the last 40 Years. The increase in supply would solve the mayors housing problem without stealing from private investors.
Another politician out to BUY votes the way Thatcher did with right to buy. The consequences of which are now clear for all to see if they understand the world of property or basic economics.
Sadiq Khan is one of the most odious politicians this country has had for years.
Thick, naive and out for personal gain; why doesn’t he concentrate of knife crime (which is out of control) or moped theft (which is causing major problems in East London)
No – in true Sadiq Khan style he is following a socialist utopia that failed in the 1970’s…FREE MARKETS work. If Khan is successful this is bad news for agents, the economy and ultimately the renters.
Step away from the Daily Mail, it’ll rot your brain.
Why don’t you move to Venezuela ?
Power Gone To His HEAD
Put simply, Khan has lost the plot and is becoming dangerous!