Rent Control:

The London mayor has said he will “work out a blueprint” to overhaul rental laws for London renters before his 2020 poll.

Mr Khan has said that the arguments for rent control are overwhelming and that Londoners ‘overwhelmingly want rent control to happen’.

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He will make rent control the central plank of his campaign for his 2020 re-election bid, urging government to give him the power to address the increased rents in the capital.

His plan, to restrict rent increases, cannot be carried out within his current remit and powers, but he has told The Guardian newspaper that he fully intends to work out a blueprint for an overhaul of the laws for private renters to allow new restrictions on rent to be imposed on landlords.

Mr Khan has said:

“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.”

YouGov research by City Hall, released by it, claims that around two-thirds of the 2.4 million tenants in London, more than a quarter of the city population, are strongly in favour of rent controls.

Figures on which the Mayor’s office based its arguments claim that private rents in London rose by 38% between 2005 and 2016, and that the average one-bedroom flat in London has a rental value which is higher on average than for a three-bedroom home in every other English region.

Despite rent controls and rent regulation being roundly condemned as detrimental to any rental market, to quote Swedish economist Assar Lindbeck, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing”, however, the direction of travel seems to be that way.

LSE Professor, Christine Whitehead, Professor Emeritus in Housing Economics and co-author of a recent report on the housing market has said:

“Our research suggests that it would be better to focus on putting in place a system which allows indefinite tenancies with a degree of rent stabilisation based on a suitable index alongside a much better enforcement system which tackles both poor landlords and tenants.

“We found that landlords would be happy to offer longer term security, as long as enforcement procedures are working properly.

“Good regulation should benefit both landlords and tenants, providing a more secure investment for landlords and investors while offering greater security to tenants. Bad regulation results in disincentives to supply rented accommodation, poorer tenants being excluded from the sector and ultimately worse conditions for everyone.”

The LSE report argues that in practice many landlords don’t attempt to maximise their rents, preferring to keep their tenants longer term by not imposing increases for the length of their stay.

This suggests, says the report, that many would positively benefit from rent stabilisation (third generation rent controls) with a transparent indexation system.

But a quid pro quo for accepting such a change would have to be stronger, fairer and quicker enforcement – something that the RLA has stressed. Bad tenants and bad landlords must be under no illusions that there is an effective enforcement regime, the report says.

However, any landlord that has experienced the current enforcement regime could perhaps be forgiven for being sceptical about this hypothetical panacea being achieved, given current resources.

The housing secretary, James Brokenshire, has argued that rent controls could lead to poorer housing standards, with landlords unable to afford to maintain properties, and that this could also have a dramatic effect on housing supply, with many more landlords selling up rather than have their market rents controlled.

©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law, always seek professional advice.

2 COMMENTS

  1. Firstly, from his views on ‘rent control’ it’s apparent that Mr Khan should have followed in his father’s footsteps rather than trying to run London.

    He says that the majority of Londoners ‘overwhelming want rent control to happen’. Yes and the overwhelming majority would probably want free money and holidays handed out each week at County Hall.

    London rents are excessively high and really do impact the lives of lower paid workers, but stupidly trying to control rents is not the answer. It’s essentially a long-term structural problem within the UK economy – for years, far too much investment has been ploughed into London and the South East, thus people need to come to London to work and then they need to live somewhere.

    There are many parts of the UK such as the North, where house prices and rents have actually FALLEN in the past 10 years. The long-term sensible answer is for the government to invest much more in the poorer regions of the UK and incentivise private companies to re-locate there. This will eventually take the pressure off the London housing market. If you try to satisfy demand in London by building more council housing you will end up needing to build more council housing…and then more council housing and so on.

  2. I do not know where Khan is getting his figures. Since the Brexit referendum we have actually had to drop rents in London to avoid long void periods. My friends in lettings say the current market favours tenants with more choice available and room to negotiate. However as a Landlord what I most want is a stable income and faster eviction of rogue tenants who often deliberately stop paying rent even though they are receiving full benefits. It took me almost a year to evict one such couple through Wandsworth CC causing me a loss of rent of £12k plus court costs. Surely there must be a better way to deal with rogue tenants and LLs?

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