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Rent controls will not fix London’s housing crisis
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The proposal for rent controls in London continues to be a controversial one, with mayor Sadiq Khan being urged to focus more on increasing the supply of rented housing across the capital.
The Mayor of London has called on the government to provide him with the power to put a cap on rents so that he can “fundamentally rebalance London’s private rented sector”.
Average monthly rent prices in London have increased by 35% from 2011 to 2018, rising from £1,095 to £1,473, according to the Valuation Office Agency’s analysis.
The latest English Housing Survey has also highlighted that private renters in the city spent 42% of their household income on rent, compared with 30% by those living outside of the capital in England.
However, there is a fear that Khan’s proposal could have a negative long-term impact on the quality of housing.
Paul Sloan, development director for haart, comments: “Rent controls sound great in theory, but unfortunately the reality is that they simply do not work. Around the world, we have countless examples of cities which have introduced rent controls, but that has done nothing to address affordability issues.
“The risk is that landlords are dissuaded from entering or staying in the market, which reduces the supply of available homes and can, in turn, inflate prices – the very thing the controls are brought in to avoid.
“Rent controls discourage landlords from investing in their properties which can mean that the supply of rental housing is of a lower quality than it would otherwise be, and tenants can find that repairs and maintenance are no longer a priority for landlords.
“Not only that, but the research from RLA has shown that rent controls can even serve to accelerate rises. An example from Berlin has shown that rental controls actually made rents rise by about ten% over two years, whereas before the controls were introduced, they rose by about one to two% per year.
“We believe that rental controls are no substitute for a functional market where homes are fairly priced and well-maintained. Rather than plumping for a system which has been proven not to work, we call upon the Mayor and the government to work alongside private landlords to discover measures that will keep them in the market and find ways to entice new people into becoming landlords.
“After all, increasing the supply of good quality homes into the rental market is by far the best method of keeping rental prices at a reasonable level.”
