The Residential Landlords Association (RLA) has warned that growing speculation the mayor of London Sadiq Khan is considering introducing rent controls across the capital risks hurting tenants as well as landlords by damping investment in the private rented sector.
In a letter to Karen Buck, the Labour MP for Westminster North, seen by the Guardian, Khan stated that London needed to adopt a “strategic approach to rent stabilisation and control”, since the arguments in favour of capping rent inflation are becoming “overwhelming”.
It is understood that Khan wants to hand greater powers to local councils in order to give them the ability to tackle overinflated rents.
But the RLA fears that the introduction of rent controls in the Capital would have an adverse affect on the private rented sector.
David Smith, policy director for the RLA, said: “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.”
Rent controls have been used before in London, as part of national legislation, with most privately rented homes subject to some form of rent cap until the late 1980s.
However, the 1980 and 1988 Housing Acts, introduced under then prime minister Margaret Thatcher changed all that. Rent controls were scrapped and tenancies were deregulated with a view to increasing investment in the private rental sector.
“In the end what is needed is a relentless focus on boosting the supply of housing,” Smith added.