London mayor Sadiq Khan unveils rent control proposals – without the power to implement them

19 July 2019

The mayor of London has announced a series of proposals to control rental prices in the capital, without any effective powers to enact them

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The mayor has called on the government to give him powers to introduce rent controls across London.

Mr Khan’s proposals include:

  • Designing a system of rent control including implementation, monitoring and enforcement
  • Plans to reduce existing rents and cap rents on new agreements
  • Creation of incentives to encourage investment in new and existing rental housing supply
  • Set up of a ‘London Private Rent Commission,' with renters on the board to oversee all of the above

Other proposals made by the mayor include open-ended tenancies, ending no fault evictions, scrapping break clauses in tenancy agreements, and better access to dispute resolution services.

Commenting, Mr Khan, says: “It is high time for private renting in London to be transformed - Londoners need fundamental change that is long overdue.

"Unlike other mayors around the world, I have no powers over the private rented sector. That's why this landmark report sets out a detailed blueprint of what the government must do to overhaul tenancy laws, and what powers City Hall needs from them to bring rents down.

"We have made important progress over the last three years by working closely with councils and renters - from 'naming and shaming' rogue landlords and banning letting agents’ fees for tenants, to being part of the successful campaign to scrap 'section 21'.

"But now we need the Government to play their part by making tenancy laws fit for purpose, and by enabling us to bring in the rent control Londoners so urgently need."

 ‘Idiotic’ idea

There has however been quick condemnation of the ideas from many in the housing sector.

Commentators point to the unintended consequences of government intervention, such as the ban on tenancy fees which has in some cases increased rents.

Co-founder of room share platform, ideal flatmate, Tom Gatzen, comments: “A quite frankly laughable proposal from Sadiq Khan and one that reeks of desperation.

“During his time in power, his severe failure to deliver on the number of new homes promised has contributed massively towards an over-reliance on the London rental sector. This demand has pushed rental prices up further and the capital’s tenants are the ones that have paid the price.

“We’ve already seen the detrimental impact an ill-thought-out ‘tenant first’ policy can have on the market in the wake of the tenant fee ban, with many letting agents and landlords increasing rents to recoup lost income.”

Data from mutual insurer LV= shows that landlords in London spend on average £3,197 a year on maintaining their properties through repairs, refurbishments and maintenance.

The insurer found that more than 600,000 landlords, some 41% of all the landlords in the UK, are already considering exiting the market. 

Marc von Grundherr, director of independent letting and sales agent Benham and Reeves, points out that making it more difficult for landlords to earn an income from buy-to-let isn’t going to help increase the supply of rental housing or the quality of existing properties.

“There is no doubt that we need to address the issues surrounding the London rental market, but to attempt to remedy said problems through a freeze on rents isn’t far short of idiotic and demonstrates a real lack of understanding when it comes to the rental sector and wider property market,” he says.

“To further deter landlords from the rental space by restricting the income available, having already hit them where it hurts via a ban on tenant fees, stamp duty hikes, and tax changes, will only see a reduction in stock and further inflame the issues that we are currently seeing.

“Landlords are the lifeblood of the rental market, they need to be encouraged to remain in the sector, not to exit it. Had the number of homes promised actually been delivered we would have seen a natural adjustment to rental prices in the capital through a reduction in demand.”

Comments

Rent control

There always used to be rent control by councils. The Conservative government removed this protection for tenants. Landlords and agents managed to make a profit with fair rent controls and no extortionate fees. Of course they are complaining at the prospect of being stopped from fleecing tenants.

In reply to by Jean ELLIOTT (not verified)

Rent control

My grandfather owned a house for some years where the rent control meant the rent didn't cover the costs of maintaining the property (luckily he had no mortgage) and was stuck in that situation until the little old lady living there finally got too old to live alone. Due to the rent controls she had no incentive to downsize from a 3 bed property making it available for a family, and once she moved out my grandfather promptly opted to get out of rental and sold the property. So no the old rent controls did NOT work.

Rent controls

Sounds great cap rent end evictions - but who would be one a landlord . There’s always a risk you get a tenant who will not pay. But even if they do with tax on turnover not profit say £1000 a month rent mortgage interest only for £200.000 is £500 a month so profit £500 a month les insurance gas safety respairs £ 150 £100 and £650 a year £900 less £=10% lett8ng agent fees £1200 a year You receive £5,100 a year but taxed at 40% of £12000 ie £4800 tax so a profit after tax £300 a year really not good

Rent control

Rent control isn't a new idea, but it is a silly idea. It adds more red tape to the rental market and inevitably will drive down prices for tenants as the mayor will ensure that rents don't rise with house prices. Seems great for tenants but the what happens when a landlord wants to sell. They will have to turf out the tenants because no landlord could afford to buy the property with sitting tenants because the artificially low rental income will not cover the mortgage. The landlords, who are making less cash will also be more unlikely to invest in the home meaning that there is a drop in the standard of accommodation in the capital. More slum housing all around.

First Communist of London

What next? Setting energy, land and food prices? Then nationalisation. He can set up labour camps in Scotland for socially "unstable' elements.

Rent Control for Private Landlords

I think it is a very good idea, the current building policy benefits those who can afford the high prices and then they let them out at ridiculous rents .Council and Housing associations seem to be capped or at least decent rents for people that cannot afford mortgages - what we really need is more social housing. But it seems that some Councils are more interested in "Social Cleansing" by sending homeless people or those on their housing waiting lists to different parts of the country away from family and support networks. They would rather let developers build expensive properties and get all the Council Tax at the expense of people who may have to get in debt to pay private landlords making a fortune.

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