Mayor of London Sets out Blueprint for Rental Housing

The Mayor of London, Sadiq Khan, has set out his blueprint for rental housing in the capital as part of his 2020 re-election bid, including a proposal for rent controls.

Khan is hoping to gain Government support to give the Greater London Authority (GLA) the power to combat increasing rent prices in the capital.

The Mayor wants to create a blueprint for an overhaul of the law for private rental housing, to allow new restrictions on rent prices to be imposed. For this to happen, he would require approval by central Government.

Khan told the Guardian: “London is in the middle of a desperate housing crisis that has been generations in the making. I am doing everything in my power to tackle it – including building record numbers of new social homes – but I have long been frustrated by my lack of powers to help private renters.”

Labour’s London Assembly Housing Spokesperson, Tom Copley AM, has welcomed the Mayor’s rent control plans.

He says: “Londoners have faced continuous and exorbitant rent increases for far too long, paying out an increasing amount of their income without seeing any improvements to conditions or their rights within the private rented sector.

“However, with this announcement, it is clear that City Hall is listening to the vast majority of Londoners, fed up of being ignored by the Government and keen to see rent controls implemented as a matter of urgency.”

Copley also expressed his satisfaction in Khan’s proposal to scrap Section 21 notices.

He adds: “Roughly, a third of Londoners will rent from a private landlord by the end of this decade. So, I hope that the Government will get behind this and other measures that will bring London’s private rented sector into line with European capitals, such as Paris and Berlin.”

However, John Stewart, the Policy Manager for the Residential Landlords Association (RLA), is unimpressed by the Mayor’s blueprint for rental housing: “It is curious that the Mayor is considering introducing rent controls at a time when rents in London are falling in real terms, according to official data.

“The Labour Party in Wales has previously rejected rent controls, arguing that they reduce incentives to invest in new property when we need more and lead to a reduction in the quality of housing. The same would be the case in London.”

He explains: “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.

“In the end, what is needed is a relentless focus on boosting the supply of housing.”

The latest data from the Office for National Statistics shows that, in the year to December 2018, rent prices in London increased by an average of 0.2%, which was well below the rate of inflation.

Alexandra Morris, the Managing Director of online letting agent MakeUrMove, agrees with Stewart: “The main problem for tenants is a lack of supply in the housing market, meaning it does not meet demand, particularly when it comes to social housing. Rent controls do not deal with this problem; they merely seek to address a symptom of the problem.

“Most good landlords don’t regularly increase rents, because they want to provide a service their tenants can afford. This means most landlords experience a real terms reduction in their rental income year-on-year.”

She continues: “Rent controls would represent another burden for landlords who are already facing interest rate rises, tax relief changes and increasing regulation. This could become a further barrier to landlords covering their costs or making a small profit.

“As smaller landlords often have one eye on getting out of the market, rent controls could prove to be the final straw. This would further reduce capacity in the private rental sector.”

Morris goes on: “In addition, there will also be some landlords who wouldn’t have increased rents, but who now feel they have permission to put rents up in line with the rent control measures.

“All of these factors will lead to more rapidly increasing average rents, because the fundamental issue – that we aren’t building anywhere near enough homes in the UK – has yet to be adequately addressed.”