Rent controls could be brought in across the whole of London to tackle the ‘affordability crisis’.
However, the critics were lining up after Mayor Sadiq Khan said yesterday he will develop a new blueprint for stabilising or controlling private rents in the capital.
If the Mayor himself cannot bring in rent controls, he will demand that the Government does, with a precedent likely to be set for elsewhere.
His announcement came as new polling carried out by City Hall and YouGov found strong support for rent controls, with over two-thirds (68%) of Londoners in favour.
Only 16% were against, while the remainder had no opinion.
Khan argues that between 2005 and 2016, average private rents in London rose by 38%, and that over a quarter of Londoners (27%) now rent.
According to the Valuation Office, renters in London pay more for a one-bedroom home than tenants elsewhere in England pay for one with three bedrooms.
Khan has invited Karen Buck, Labour MP for Westminster North, to work with London deputy mayor for housing James Murray to develop proposals for rent stabilisation or control laws.
If rent controls are to be introduced in the capital, a precedent could be set for England and possibly Wales, which like Scotland has devolved housing powers.
In Scotland, new laws allow councils to implement ‘rent pressure zones’ where rent rises are capped at no higher than inflation.
Khan, who has already said he wants to see the end of Section 21, or ‘no fault’ evictions, appears to accept that as Mayor he may not have the powers to bring in rent controls.
Yesterday he said that if this is the case, he will campaign and lobby for changes to be implemented by the Government.
He said: “London is in the middle of a desperate housing crisis that has been generations in the making. At City Hall we are doing everything in our power to tackle it, but I have long been frustrated by my lack of powers to help private renters.
“The arguments for rent control are overwhelming, and Londoners overwhelmingly want it to happen. It’s vital that the Government acts.”
Karen Buck, who introduced the Homes (Fitness for Human Habitation) Act 2018 as a Private Member’s Bill, said: “We need an approach to rent stabilisation and control that works in London, and I am very pleased to be working with Sadiq’s team to develop a blueprint for what Government should do.
“Once we have set out these proposals, we will argue the case that ministers must support London’s private renters by putting our plans into action.”
Hannah Slater, policy manager at Generation Rent, said: “We applaud the Mayor’s commitment to explore how rent controls can work to provide Londoners with stable and affordable homes.”
However, critics of Khan’s rent control plans are already warning against such a plan.
David Cox, CEO of ARLA, said: “Rent controls do not work; they hits hardest those designed to help the most, and political parties advocating such systems have failed to learn the lessons of history.
“The last time rent controls existed in this country, the private rented sector shrunk from 90% to 7%.
“At a time of demand for PRS homes massively outstripping supply, rent controls will cause the sector to shrink.
“In turn, this means professional landlords will only take the very best tenants, and the vulnerable and low-income people that rent controls are designed to help, will be forced into the hands of rogue and criminal operators, who may exploit them.”
John Goodall, CEO of buy-to-let lender Landbay, accused the mayor of “grandstanding”.
He said: “Rent controls are likely to lead to a reduced investment into the rental sector and thus a further shortage of high-quality rental accommodation.
“That will not lead to a positive outcome for London’s renters as they will find it harder to find decent properties.
“The Mayor should be looking to find ways to encourage investment rather than political grandstanding that will end up harming those that he claims he is trying to help.”
Chris Norris, of the National Landlords Association, said: “It is frankly bizarre that the Mayor of London should choose to develop a blueprint for stabilising rents.
“It is equally odd that the announcement justifying the decision should be based on rent data for 2005 and 2016, when according to the Mayor of London’s own housing data, private rents in the capital have dropped consistently from 2016.
“In the year to July 2018, private rents in London fell 0.3% compared to an average increase in the rest of England of 1.6%. When adjusted for inflation (as published by the Mayor’s team) this equates to a real-terms fall of around 2.25%.
“It’s often assumed that high rents are the product of landlords’ greed rather than market forces. However, housing costs are seen as relatively high because wages have not kept pace with the cost of supply. Capping the rent which can be charged will alter neither of these factors.
“Artificially suppressing rents sounds like an easy solution, but it would be counter-productive and fails to address the root causes of a lack of affordable housing.
“History shows that rent controls stifle the supply of housing and reduce the money available to a landlord to maintain their properties. That benefits no one.”
The Residential Landlords Association said: “All evidence around the world shows that where forms of rent control are in place, decoupling prices from the value of properties hurts both tenants and landlords.”