Landlords have expressed their concern that rent controls for the city could create a catastrophe for potential tenants.
The warning has come from landlord associations the NLA (National Landlords Association) and the RLA (Residential Landlords Association), as Sadiq Khan, the Mayor of London, calls for the introduction of rental controls, which are at the centre of his bid for re-election.
The Mayor’s plans were announced despite warnings from industry experts on the danger of rent controls, which would cause damage to the market as the demand for privately rented homes in London is vastly outstripping the supply.
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Research from the Estate Agent Knight Frank has discovered that in 2019 within the city there was an average of 6.1 potential tenants for each listing. This is an increase of 1.4 tenants from 2018, when it was 4.7.
The Centre for Cities, a charity and research unit for urban policy, has issued a warning, explaining that rent controls would close London off for new residents. In addition to this, the Resolution Foundation, an independent think tank which focuses on improving living standards for residents on middle to low incomes, stated that keeping the real market price of privately rented housing using rent controls would be unlikely to succeed. Instead, they insist, the focus should be on increasing the current supply of housing.
The manager for policy at the RLA, John Stewart, alongside the director for policy at the NLA, Chris Norris, explained that although they may seem an attractive prospect to current tenants, rental controls would create a disastrous environment in the rental market for any individual searching for a home to rent.
They state that all this policy would achieve is to push buy-to-let landlords away from the rental market, which has been demonstrated by experience and history elsewhere. This would be a catastrophe for the market, which already has a serious shortage of available homes.
Rather than proposing superficially appealing or simplistic plans in an attempt to gain votes, Sadiq Khan must focus instead on encouraging the supply of housing available by utilising the powers which he currently has. Only then will any discernible impact be made on improving the current affordability of homes across London.
A housing expert from the London School of Economics, Professor Kath Scanlon, warned in 2019 that the proposals for rent control from the London Mayor would result in buy-to-let landlords deciding simply that they will no longer let their properties out to tenants.
Ms Scanlon explained that the proposals from the Mayor are not intended to simply cap rent levels at the existing levels or regulate the rise of rent prices within leases but to instead reduce rental costs from the current levels. She goes on to explain that despite conducting several studies on rent regulation internationally, she has never seen such a policy work elsewhere.
Kath Scanlon also warns that the level of regulation which would be implemented is unseen in any other developed country across the world and would have extremely dramatic and unintended consequences. She predicts that buy-to-let landlords would instead simply decide that they would no longer let their rental properties to tenants in the wake of such rent controls.
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