Rent Control In London: About To Change Our Lives (& Finances) Forever?

How do you solve a problem like London’s private rental market? For years it has been an expensive race to the bottom as our capital quickly became the epicentre of Britain’s housing crisis. It is now a city of wild extremes – a place where steel-boned, gleaming glass high-rises sit empty, the flats within them bought by offshore investors, while elsewhere, living rooms have become the height of luxury, so rare are they, and people on middle and low incomes cram into crowded HMOs (houses in multiple occupation) because it’s all they can afford. And even then, they’re not that cheap: according to the Greater London Authority, the average private rent for a one-bed home in the capital is now more than the average cost of a three-bed in every other region of England.

There can be no doubt that the cost of housing is reshaping our city and our society. Only this week, we learned, courtesy of the Women’s Budget Group, that all over the country housing inequality is disproportionately affecting women, all of which, it goes without saying, is very bad news.

This shouldn’t really come as a surprise, though. Things have been coming to a head for a while and renters in London have been able to do little more than look on in horror. Insurmountable as this might all sound, there is a very obvious solution and the Mayor of London Sadiq Khan is putting his weight behind it: rent control.

Today, Khan launched his proposals for 'Reforming Private Renting', and told Refinery29 that maintaining the current status quo is just not an option.

"The reality is this," he said. "If you look at our city, from 1990 when 10% [of people] were renting privately, there are now 25% renting privately and because it will take us some time to build the homes we need, we've got to make sure [renting] is affordable for Londoners because what I've seen on a regular basis is Londoners leaving London because they can't afford to live here anymore."

Studies show that rent control can work to ease pressure in inflated housing markets. Researchers at the German Institute for Economic Research found that it had helped in the parts of Germany that had experienced the biggest rent increases, such as Berlin. However, critics argue that it would drive investors out of the market.

However, as you might expect, not everyone is in favour of it because we live in Britain where state intervention is a dirty phrase. Arguments against rent control include that it will drive landlords and investors out of the housing market and cause prices to go up as a result.

"I understand that there are some lessons to be learned from around the world, whether that's Paris, Berlin, New York or Scotland," Khan said. "There are things to avoid but the key thing is this: the status quo is not acceptable. We can't have a situation where you've got children being pulled out of schools because landlords are raising rents to extortionate levels."

Referencing a report published earlier this week which found that key workers can no longer afford to live in London, he added: "And we can't have a situation where nurses, teachers and police officers can't afford to live in London because of the cost of private rent."

Based on the unavoidable and mounting evidence of London’s soaring housing inequality, it’s hard not to conclude that rent control is needed. Earlier this year, London rents hit yet another record high with average monthly costs exceeding £2,000. Younger people, in particular, are spending ever higher proportions of their income on rent – the average figure now stands at 53%. For context, housing experts globally deem unaffordable anything above a third of someone’s income. This is known as the 30% rule. How much more can people take?

Khan has been in favour of rent control in London since his campaign to become mayor back in 2015 so this announcement, which he has worked on with the Labour MP for Westminster North, Karen Buck (who, for those who don’t know, was behind the Homes (Fitness For Human Habitation) Act, which has given renters crucial rights) has been a long time coming.

The UK isn’t the only country facing a housing crisis, the difference is how we’re dealing with it. Only recently have other major global cities implemented rent control. Last month, Berlin’s coalition government voted to freeze rents in the city for five years as of next year in an attempt to halt further gentrification.

Similarly, in New York, Democratic lawmakers recently passed legislation that would regulate rents and strengthen protections for renters, much to the disdain of landlords.

However, there is a snag here, which the mayor himself acknowledges. "Unlike other mayors around the world, I have no powers over the private rented sector," he told Refinery29. "That's why this landmark report sets out a detailed blueprint of what the government must do to overhaul tenancy laws, and what powers City Hall needs from them to bring rents down."

The mayor will need to take up his proposals with whoever becomes the next prime minister. He told Refinery29: "What's important is that the new prime minister – and I'm assuming it's going to be Boris Johnson because that's what experts are telling me – understands the needs of our city. One of which, by the way, is that our economy is dependent on having a good deal with the EU...but the other thing that I'm hoping he learned as the mayor of London himself is that we've got a housing crisis, and successive governments (and I include the Labour Party in that) have let down London."

"The evidence [for rent control] is there. This is not a knee-jerk policy announcement. It's been put together in partnership with an independent think tank – the New Economics Foundation – who have done the research required."

"The government should give us the power to bring in rent controls," Khan said. He wants critics of rent control to know it's not in his interest "for there to be less private rental properties in London – we will work with landlords as well as tenants and good developers who are building build to rent accommodation," he added.

Khan says he is mindful that it’s important to find "incentives to encourage investment in new and existing rental housing supply" in his proposal. He also knows that rent control is only part of the answer to London’s problems. The proposal also includes the introduction of open-ended tenancies, the end of 'no fault' evictions under a bit of the Housing Act known as Section 21, increasing notice periods to four months and making sure both tenants and landlords have access to better support and dispute resolution services.

The government has already vowed to do away with Section 21 but the question of whether landlords would just continue to evict people by putting up the rent without the introduction of rent control remains.

While there’s no doubt that the mayor’s proposals would certainly make a big difference to London’s 2.4 million renters, for now the power lies in Westminster and whoever takes over from Theresa May as the next prime minister.