A political economist has compared rent controls to socialism and insists they are always doomed to failure.

Sadiq Khan is determined to demand powers to implement a cap on rents in London if he wins the upcoming mayoral elections.

However, Dr Kristian Niemietz, head of political economy at the Institute of Economic Affairs, believes the capital would be wrong to introduce controls because, just like socialism, they have been tried dozens of times – and never work.

The Labour party has also vowed to put bad landlords out of business and promises a new “charter of renters” rights to put power back into the hands of tenants, with a rent cap linked to national inflation.

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However, earlier this year, the Scottish government admitted that its similar Rent Pressure Zones had been a flop.

Dr Niemietz uses Berlin as the latest example of the system’s failure, telling City A.M: “After the introduction of a rent cap, the supply of rental properties coming on the market fell by almost half, at a time when it increased in comparable German cities. But, needless to say: the cap remains.”

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Ben Beadle, chief executive of the National Residential Landlords Association, agrees that rent controls would be a disaster for London and warns that any move to control rent rises by linking them to inflation would leave tenants worse off.

He adds: “The story of rent controls wherever they have been introduced is that they exacerbate an already serious shortage of available homes. Rather than calling for things he cannot deliver, the mayor should focus on using the powers he already has to boost the supply of available housing, including for private rent.”

It says figures from the Office for National Statistics show rents in the capital have fallen by 9.6% between April 2016 (the month before Sadiq Khan came to office) and February 2021.

6 COMMENTS

  1. Because they don’t have the money as they are wasting it on stupid schemes such as accommodating illegal immigrants in 5 star hotels and overseas aid amongst many others!

  2. Most foreigners working in UK have a home back in their homeland… they were not living in a tent before taking work here. Pretty much everyone from Europe have a home to go to and every Christmas there is a mass exodus as they go back to their other home… UK is nuts even attempting to “House the world”

    British second home owners are heavily taxed in UK…. ALL Europeans should face the second home tax immediately they attempt to buy any sort of property because they already have a house back in there home country. they are therefore all second home owner.

    5 million came invited by T Blair with no state intervention to build housing, schools etc etc….

    The PRS stepped up by converting space above shops, renovating under used properties and their reward for managing to house the 5 million is the Eviction Ban… Legalised theft on a grand scale.

  3. Socialists never seem to understand that capitalists which all LL de facto are will not offer their properties at less than market rents.

    They will either start requiring brown envelopes of cash or will sell up.

    There would also be an affect on letting property values.
    Mortgages could only be based on controlled rent levels.

    That means massively larger deposits would be required.

    Property values would decline.

    If I was a London LL I’d be selling up.

    London is hostage to an idiot socialist voting electorate.

    Not a good place to be for capitalist LL.

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