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.”