Rents continue to outpace the rate of house price rises across much of the UK, and London Mayor Sadiq Khan has once again suggested a rent freeze as the answer.
Sadiq Khan has been calling on the government to step in and put a stop to rising rents in London for a number of years now, and the mayor continues to believe this is the best step to take.
In a Tweet responding to a news report remarking on rising rents in London, Khan wrote: “Our private rental market can’t continue like this – it’s not sustainable for Londoners who are struggling with other rising costs too. The government must allow me to freeze rents in the capital.”
Our private rental market can’t continue like this—it’s not sustainable for Londoners who are struggling with other rising costs too.
The Govt must allow me to freeze rents in the capital. https://t.co/3oRGUWCRbX
— Mayor of London, Sadiq Khan (@MayorofLondon) April 2, 2023
The figures from Rightmove honed in on asking prices rather than actual rental values received, but showed a definite uplift in levels in both inner and outer London. In central London, average asking rents are now more than £3,000 per month.
Why impose a rent freeze?
Khan’s plans to bring in a rent freeze across parts of London are based on making the market more affordable for privately renting tenants, which make up around a third of all the households in the capital. By preventing rents from rising any higher, he believes this would alleviate the cost of living crisis for many.
Rents have been climbing across the country in recent years due to a heightened imbalance between demand and supply. More households than ever in the UK now rent for longer before buying their first property, along with the number of one-person households putting pressure on the number of homes available.
In London, the proportion of renters has more than doubled since the 1990s, and Khan has also pointed out in the past that a typical one-bedroom flat in London would be the same price as a three-bedroom property in many other regions. A rent freeze would essentially level up this disparity.
Scotland is one example cited by Khan of a country where rent controls are in place. At the moment, there is a 3% rent rise cap on tenancies in Scotland, while a temporary eviction ban is also in place there until at least September this year. The mayor could wish to implement a similar style rent freeze in London.
Criticism of the proposal
Of course, while on the surface Khan’s intentions may appear to make sense to struggling tenants, they may not be the simple, quick fix that some are hoping for – and would certainly do nothing to tackle the lack of supply in the sector, which is something many argue holds greater importance to the rental market.
One government spokesperson has responded to the idea by saying that there is evidence that rent controls simply do not work, and could even lead to “declining standards and a lack of investment and may encourage illegal subletting”.
Hitting back at Khan’s suggestion, Ben Beadle, CEO of the National Residential Landlords’ Association (NRLA), said: “Another day, another call for a rent freeze from the man who’s in charge of housing numbers in London.
“So rather than deflect and choke off supply further, why not do something already in your control like increase supply and investor confidence which will bring rents down?
“You could also help people by not increasing costs – licensing, ULEZ extension, fares – and perhaps support NRLA calls for a review of property taxation and encourage pro-growth measures. Just a thought.”
The fact that many landlords in London must face the additional costs Beadle refers to means that, without putting rents up, they may not be able to afford to operate. This could be detrimental to the rental market if landlords were to leave the sector if they were to see their bottom lines deplete due to a rent freeze.
