London’s mayor has called on the government to give him the power to limit the amount that landlords can charge tenants, in a bid to solve the housing crisis gripping the capital.
Sadiq Khan said this week that arguments for rent control were “overwhelming”, and that residents across the city support it. “London is in the middle of a desperate housing crisis that has been generations in the making,” Khan told the Guardian newspaper.
“I am doing everything in my power to tackle it – including building record numbers of new social homes – but I have long been frustrated by my lack of powers to help private renters.”
But would imposing the measure solve London’s renting nightmare? The answer, it seems, depends on who you ask and what form it takes.
What is rent control?
Rent control laws seek to stabilise prices within a local rental market.
They most often come in two forms: a cap on the amount a landlord can increase the cost of renting a property by while the tenant is living there; or a cap on how much a landlord can rent a property out for overall.
Has rent control worked in the past?
Regulations governing the cost of rents were very common in Britain between the end of the Second World War and the 1980s.
“Fair rents” would be determined by rent officers, who would visit individual properties to determine the maximum amount that could be charged by a landlord to tenants.
However, these rules ended after a government effort to open up the rental market and increase incentives for landlords to improve the quality of their properties.
There are a very small number of properties in the UK still subject to rent control, or “regulated tenancies”, with many paid for through housing benefit.
Of around 1.5 million private tenants claiming housing benefit, only 20,500 live in properties subject to regulated tenancies, according to latest statistics from the Department for Work and Pensions.
While these tenants do pay below the market rate for their properties, critics of rent control point out that properties still subject to regulated tenancies are often among the worst maintained in local authority areas.
Does rent control work in other countries?
The left-wing think tank IPPR found in 2017 that German tenants enjoy much more stability when renting, in part due to the presence of rent control.
Germany’s rent control laws prevent landlords from increasing the cost of a tenancy once the contract is signed – and are backed up by indefinite tenancies and laws which prevent landlords from evicting tenants for no reason.
In England, the majority of short-term tenancies run for six months or a year – after which a landlord can turf out tenants without cause.
A recently enacted “rent brake” in Germany also makes it more difficult for landlords to hike rents in between tenants.
But it’s worth noting that renting in Germany is much more common and tenants in the country make up a more sizeable and active electorate than in Britain.
What do landlords say?
The Residential Landlords Association (RLA), which represents those who let out properties, believes Khan’s support for rent control comes at a time when rents in London have effectively stalled.
Research by Landbay, a mortgage broker, found average London rents did not increase between 2016 and 2018 – hovering around £1,880 per month.
The RLA’s John Stewart told HuffPost UK: “It seems bizarre that there is a push for rent controls at a time when rental prices are in retreat.”
He said rent control “would encourage early ending of tenancies so that landlords” can dodge caps on rent.
“Rent increases below inflation would be a thing of the past. Government would effectively be setting rent increases higher than they would otherwise have been.”
Stewart said that rent control is often advocated by those who want to cut rents and force landlords to sell up, a process he denied would benefit existing tenants or those hoping to get a foot on the London property ladder.
What do tenants say?
Dan Wilson Craw, the director of campaign group Generation Rent, which supports a form of rent control in London, told HuffPost it was good to see an elected official support a discussion of the measure.
“Ultimately rents are too high and rent control could help in the short term,” he said.
He believes a “fairly limited rent control” could limit how fast rents can rise. “The main benefit of that would provide renters with more certainty and stop landlords raising the rent by an unreasonable amount,” he said.
But Wilson Craw said a more ambitious form of rent control would set rents in the market, for example, by giving landlords tax incentives to join a so-called “Living Rent” scheme, which ensures affordability.
“Of course, any system of controlling rents would need to also do something to build more homes,” he said. “Rent control needs to come alongside changes to tenancies and protections against unfair evictions.”
What does the government say?
A spokesperson for the communities secretary, James Brokenshire, told HuffPost UK: “The mayor came into office saying he’d sort out London’s housing market, instead what he’s overseen an eye-watering drop of 20% in new starts. If he can’t use the powers he does have effectively, why on earth would Londoners trust him with more?
“Contrast this with the Conservative government’s record on supporting those in the private rental market and you can see what positive action looks like; abolishing letting agents’ fees, longer and more secure tenancies, improving access to redress.
“People who want a more affordable and secure private rental market thankfully don’t need the mayor’s help because they can trust the Conservatives in government to watch their backs.”