Sadiq Khan, the new Mayor of London, has received support from property professionals for his campaign to introduce rent controls in the capital.
The average private rent price in London has hit a huge 62% of the typical wage, making housing unaffordable for the average tenant.
Khan is continuing to focus on the capital’s housing crisis, after his mayoral election campaign emphasised the issue that affects many Londoners.
However, Khan’s plans will require the co-operation of central Government to enforce any regulations on the private rental sector.
His measures have been criticised by Shaun Bailey, a Conservative politician elected to the London Assembly, who called them “Soviet-style rent controls”1.
Mayor of London Receives Support for Rent Controls
Despite this, some property experts have spoken out in support of rent stabilisation measures.
The Head of Residential Research at JLL estate agent, Adam Challis, explains: “This is being described as rent control, but it is more properly described as rent indexing, and, set at the right level, it is completely palatable to investors. It offers a sense of relative certainty over what future rental growth is going to be.”
Richard Donnell, the Director of Research at Hometrack, believes large-scale landlords will accept a measure of control on rents – a finding reflected by a University of Cambridge study for the London Assembly last year.
These measures are often accompanied by longer tenancies, which was included in Zac Goldsmith’s – Khan’s main rival – mayoral manifesto.
However, Lucian Cook, the Director of Residential Research at Savills estate agent, claims: “Anything that involves capping rents may be a double-edged sword.”1 He insists that the fundamental problem lies in the shortage of supply of new homes.
More politically achievable is a London living rent, which Khan says would take the form of rents capped at one-third of the local average income, rather than market rents.
Challis claims this could replace existing affordable rents, which are often required within new developments under planning agreements. Part of Khan’s housing plan is to insist that 50% of all new home developments are affordable.
In the private rental sector, affordable rents can currently cost up to 80% of market rates.
Challis believes: “To implement this on new properties would be relatively easy – it’s already what we do in various forms within the affordable housing spectrum. That’s something that would probably be supported by the local population and by local authorities.”1
Julian Goddard, a partner at property advisers Daniel Watney, thinks there are more serious issues to look at: “My recommendation would be to look at the supply side and take measures to ease the viability of new schemes.”1
The Policy Manager at Generation Rent, Dan Wilson Craw, insists that rents linked to wages should be introduced across the market: “The living rent seems to be spooking a lot of landlords, but it is not big enough for them to worry about – we would like it to be far more widespread.”1
Yesterday, we reported on Khan’s plans to release a new list of rogue landlords. The database would ensure that tenants could check whether a landlord has committed any housing offences.
Do you believe that Khan’s plans will benefit all in London’s private rental sector?
1 https://next.ft.com/content/f432c7aa-16bd-11e6-b197-a4af20d5575e