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TODAY'S OTHER NEWS

A rent freeze is quite simply ‘another type of rent control’

Sadiq Khan’s proposal to introduce rent controls in London risks reducing the number of private homes available for rent, as landlords look to exit the private rented sector. 

The mayor of London has once called on the government to hand him extra powers so he can cap rents in the city in order to rebalance London’s private rented sector. 

But Mary-Anne Bowring, group managing director at Ringley and creator of automated lettings platform, PlanetRent, is urging the Labour politician to forget about rent controls and instead focus on lobbying the government to extend the furlough scheme and increase benefit payments.

Bowring commented: ”A rent freeze is just another type of rent control and will have exactly the same effect: reduced investment into the rental marketing, reducing the availability and quality of rental housing and in turn pushing up rents.

“While the government was right to bring in initial protections for tenants at the start of the pandemic, landlords should not be expected to subsidise renters indefinitely. Already there is evidence of rent arrears mounting up and for many landlords, their rental property is their pension.

“If the government was serious about avoiding carnage in the private rented sector it would consider extending the furlough scheme and increasing benefit payments.”

 

The National Landlords Association (NRLA) has already warned against proposals for rent controls, which are at the heart of Khan's re-election bid, as they would be potentially disastrous for aspiring tenants. 

The Centre for Cities warned earlier this year that strict rent control “would close off London to new residents” and the Resolution Foundation commented that holding down the true market price of private housing via rent controls rather than increasing housing supply is unlikely to succeed.

Professor Kath Scanlon, a housing expert at the London School of Economics, last year warned that the mayor’s rent control proposals would result in landlords simply deciding that they were no longer going to rent their properties.

Speaking in March, John Stewart, now deputy director of policy and research, at the NRLA, said: “Rent controls might appear attractive to those already renting but they would be a disaster for anyone looking for somewhere to rent. All they would achieve, as history and experience elsewhere tells us, is to drive landlords out of the market exacerbating an already serious shortage of homes available.

“Instead of putting out simplistic and superficially appealing proposals in attempt to win votes, the Mayor should focus on boosting the supply of available housing using the powers he already has. Only then will he make any discernible impact on improving the affordability of housing across the capital.”

Poll: Do you think a Berlin-style rental rate freeze would deter BTL landlords from investing in London's housing market?

PLACE YOUR VOTE BELOW

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    Put simply: the best form of rent control is an adequate supply of housing in the first place. But that would now be a disaster as it would mean that house prices would come down as well and we would have another housing crash. But if landlords exit en masse then the extra properties for sale would bring down prices anyway and leave potential renters homeless, assuming most won't be able to afford to buy somewhere instead. So the only good solution is a gradual rebalancing between supply and demand, with adequate support for renters in the short term.

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    • 17 September 2020 11:12 AM

    Sadly you are incorrect.
    Housing supply would need to meet demand.
    It is an impossibility for housing supply to meet demand.
    So how to control demand?

    Well first deport all illegal economic migrants There are about 2 million of them

    40000 are currently staying in hotels paid for by taxpayers.

    Then remove the 400000 EU migrants from social homes.
    Then close the borders and controlling immigration like Australia does with a points based system.
    Nobody would object to immigrants if they were all nurses; doctors, scientists etc.
    We really DON'T need Romanian Gypsy Big Issue sellers.

    Once this control has been achieved then housing supply might be able to meet demand.

    As what I have stated will NEVER occur then for at least the next 100 years housing demand will exceed the supply.

     
  • Ruan Gildchirst

    Does a rent freeze mean the rent can’t go down? Average Rents could fall a lot over the few years if the global crisis continues

  • Andrew Murray

    Can Khan also have a wage freeze .

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    Price controls just don't work. Look at the energy price cap - around £300 per annum higher than that available to those with the common sense to shop around. The big energy companies capped tariffs are all right on the cap limit and no sensible consumer would countenance paying so much. The same has happened in the student accommodation market where the extortionate rents of the cardboard clad high rise purpose built ghettos have led to owners of student flats being able to charge similar rents.

    Any interference with market forces will just lead to higher rents in normal rental properties unless they are at the slum end of the market.

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    Arrears un-recoverable is rent control, you can put what you like on the Contract and they sign up to it but if you don't have the ability to collect it, this is rent controlled.

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    • 17 September 2020 18:11 PM

    An interesting way of considering rent control.
    As suggested for all practical purposes if the law very effectively prevents repossession while still allowing the a rent defaulting tenant to occupy you have rent control.

    Trouble is rent control normally indicates that some rent is being paid.
    When a LL attempts repossession few tenants carry on paying the rent.

    I guess rent control with effectively zero rent being required is a pretty effective way to reduce the cost of a tenancy for tenants.

    So I guess a tenant who intends to vacate at some time in the future just stops paying rent and awaits eviction.

    Eventually many many months if not years later the tenant is evicted.

    Rarely will a LL be successful in Civil Recovery.

    So basically tenants are able to create their own rent controls.
    All they need to do is stop paying rent and await eventual eviction.

    A nice little earner!!

     
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    That is exactly why it's every landlord's duty to use the law to maximum extent and get ccj where tenants blatantly withhold rent and refuse to vacate as soon as they realise that they can't afford to meet their contractual obligations which they freely entered into. Only then will such tenants understand the hidden costs of reneging on legally binding agreements.

     
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    Totally agree. LL MUST try every route of retribution and punishment for tenant damage of property and theft of rent.

    If not, this situation will just continue to escalate in tenant's favour.....

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    @ Robert & David, we all need to get our heads together on this one, it is the only way that we are going to get our point across, non payment of rent is theft, a CCJ for anyone and everyone that is overdue in their rent, courts have no choice on this one it is a debt, no ifs, no buts or maybes, every time these thieves try to obtain a new tenancy will this flag up, just think of all those homeless bums queuing up outside town halls , we can win this one, £60 a time money claim online , how much money do you spend at a night out down the pub ? more than £60 of that I am sure.

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    Only problem with getting a CCJ on your own tenant is that they are then unable to rent another property easily. You could shoot yourself in the foot.
    Get them out first, then do the CCJ and then escalate it to the High Court and send the bailiff round. You then have the satisfaction of hitting them in the wallet and hopefully getting paid. Only draw back is finding them first.

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