Renters in London pay a bigger proportion of their salaries for a roof over their heads than anywhere else in the UK, but proposals to cap rent rises in the capital have fallen decidedly flat.
London Mayor Sadiq Khan has asked the government to allow him to impose rent controls in the capital to help Londoners cope with the “high costs of renting”. Average asking rents in the city, according to Rightmove data compiled for the second quarter of this year, are currently at £2,059 per month, compared to the national average of £817 a month (excluding London).
However, the mayor’s proposals have come under fire from a number of groups who believe that controlling rents would only serve to damage the housing market in the capital further by discouraging investment and deterring landlords, while driving the quality of rental properties down as landlords’ profits fall.
Generation Rent would not benefit in long run
There are an estimated 2.4 million people living in private rented accommodation in London, and they spend around 42% of their average household income on rent, according to figures from the government. While the rising rents, as well as the appeal of a better work-life balance, have been drawing large numbers of young professionals in particular out of the capital towards the north, many believe Khan’s plan to cap rents would not provide a solution to the high cost of living in London.
The British Property Federation’s director of real estate policy Ian Fletcher commented: “The build-to-rent sector is now delivering 20% of all new homes in London, with 74,500 build-to-rent homes either completed or planned.
“If long-term, sustainable investment into new rental housing is deterred, this would take London further away from resolving the underlying housing issue of our time — a lack of supply.”
More affordable homes in the capital
In defence of his proposals, Khan said: “Last year we started building more genuinely affordable homes than at any time since the mayor had the powers to do so.
“In the meantime you’re going to have people renting privately. So we’ve got to make sure for those renting privately, the rents are affordable in London.”
He has suggested lowering existing rents gradually, with subsequent levels “limited within and between tenancies”.
However, Conservative politician Shaun Bailey has also criticised Khan’s proposals, saying that it would make London’s housing situation worse.
“It would drive landlords out of the market and lower the standards of the flats left on offer,” he said. “This reality is why economist Assar Lindbeck called rent controls ‘the most effective technique presently known to destroy a city – except for bombing’.”