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’.
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.