Mayor of London Sadiq Khan has called for the government to give him new powers to control rents in the capital.
Khan (pictured) doesn’t currently have these powers, though he has published a report setting out how the private rented sector in London should be transformed to give renters open-ended tenancies and to create powers to bring rents down.
Khan said: “It is high time for private renting in London to be transformed – Londoners need fundamental change that is long overdue.
“Unlike other Mayors around the world, I have no powers over the private rented sector. 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.
“We have made important progress over the last three years by working closely with councils and renters – from ‘naming and shaming’ rogue landlords and banning letting agents fees for tenants, to being part of the successful campaign to scrap ‘section 21’.
“But now we need the government to play their part by making tenancy laws fit for purpose, and by enabling us to bring in the rent control Londoners so urgently need.”
The report sets out a detailed blueprint of how tenancy laws should be overhauled and what new powers the Mayor wants from government to enable City Hall to introduce rent control.
Under his rent control proposals, the Mayor would establish a new London Private Rent Commission, with renters on its board, to implement and enforce measures to reduce rents and keep them at lower levels.
Payam Azadi, director of broker Niche Advice, who is also a landlord, criticised the idea of rent controls.
He said: “I’m not a big fan of interference by the government in a commercial sector. The government has done enough damage to the buy-to-let sector as it is. I don’t think it would be a good idea.
“Landlords need to earn money out of this otherwise we won’t have a buy-to-let sector in London. In order for people to pay tax they have to earn money.
“I think it would leave landlords in an impossible position and it would be counterproductive and have a negative effect on the housing market.
“We’re short of housing and landlords have to earn to incentive them to be able to survive in this sector. You need to let the market determine what rents are.
“It depends on what the parameters are of rent controls are. I don’t think it’ll be a good idea but let’s see the proposals first.”
Rent control and stabilisation can take many forms, but most major cities in Europe and North America have some limits on rents in the private sector.
For instance, in Berlin, rents are controlled both within and between tenancies. In some New York City apartments, rents are capped by the NYC Rent Guidelines Board, and others have their rent ‘stabilised’ or reset between tenancies.
In 2016 Scotland introduced laws that allow councils to apply to implement ‘rent pressure zones’, where rent increases are capped at no higher than inflation.
Hannah Slater, policy manager at Generation Rent, said: “Londoners are paying some of the highest rents in the world and many are struggling to keep a roof over their head in the area they grew up in or close enough to where they work.
“Unaffordable rent increases force people into stressful moves away from neighbourhoods where they have roots, thereby eroding London’s communities.
“Renters need stability in our homes that can only come from certainty over what rent we pay – but we need to afford a home in the first place. We applaud the Mayor’s commitment to explore how rent controls can work to provide Londoners with stable and affordable homes.”
However, David Smith, the Residential Landlords Association’s policy director, said: “Rent controls are meaningless if Londoners can’t find a home to live in.
He added: “Rent controls will lead to a drop in investment and increasing supply should be the Mayor’s priority.
“Localised rent controls would also have a huge impact in the surrounding areas. With demand continuing to outstrip supply, residents would have to move out of the city and rents would be pushed up further as demand increases in the commuter belt.
“Research from the Centre for Cities has found that rent controls divide renters into the privileged and outsides, with those already renting when the controls are introduced doing well but those hoping to move into the city or for more space losing out, damaging social mobility.
“London rent rises are already well below inflation increasing at just 0.9% in the year to June compared to CPI at 2%.
“We do welcome a number of the Mayor’s proposals for improving London’s rental sector including establishing a dedicated housing court and reforming the Section 8 process for landlords to regain possession of their property in legitimate circumstances.”
A spokesperson for the Ministry of Housing, Communities and Local Government, added: “The government has taken unprecedented action to transform the private rental market and protect the millions of tenants who live in rented accommodation.
“We have already announced plans to abolish ‘no-fault’ evictions – the biggest change to the private rental sector in a generation; banned unfair letting fees and capped tenancy deposits, saving renters £240m a year; and put rogue landlords on notice through our Rogue Landlord Database.”