There’s been an angry reaction to the suggestion that London’s Labour mayor, Sadiq Khan, is seeking to introduce rent controls in the capital.
An article in The Guardian suggests that Khan wants to make such controls a central policy in his re-election campaign ahead of next year’s mayoral poll.
Currently he has no powers to execute such controls but – despite earlier suggesting that rent controls could be counter-productive – he now says the arguments in favour of the policy are “overwhelming, and Londoners want it to happen.”
He adds: “I have long been frustrated by my lack of powers to help private renters”, hinting that he would hope for central government support for extending the powers of the mayor to introduce such controls.
He has now won the support of London Labour MP Karen Buck, who last year won widespread acclaim for her Private Member’s Bill to put legally-binding living standards on private rented property across England and Wales.
However, Khan’s call for stronger powers have been widely criticised.
Outspoken PR executive and former head of the Emoov agency Russell Quirk – a former Conservative councillor – has called it “a bad, bad idea … further penalising the buy to let sector with lower rents [and] yields will push landlords into other asset classes.”
And in a lengthy response to the news Chris Norris, the director of policy and practice at the National Landlords Association, says: “It is frankly bizarre that the Mayor of London should choose this moment in time to develop a blueprint for stabilising rents. It is equally odd that the announcement justifying the decision should be based on rent data for the period 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 per cent, compared to an average increase in the rest of England of 1.6 per cent. When adjusted for inflation (as published by the Mayor’s team) this equates to a real terms fall of around 2.25 per cent. So by all means stabilise rents, so long as that stabilisation works whether rents are rising or falling.
“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. In fact, 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.”
And John Stewart, policy manager for the Residential Landlords Association, has also been on the attack, saying: “It is curious that the mayor is considering introducing rent controls at a time when rents in London are falling in real terms according to official data.
“The Labour Party in Wales has previously rejected rent controls arguing that they reduce incentives to invest in new property when we need more and lead to a reduction in the quality of housing. The same would be the case in London.
“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.
“In the end what is needed is a relentless focus on boosting the supply of housing.”
The RLA adds that themost recent data from the Office for National Statistics shows that in the year to December 2018, rents in London increased by 0.2 per cent, well below inflation.
Original Source: Letting Agent Today.
Original Author: Graham Norwood.