Rent controls will hurt London tenants

22 Jan 2019 01:10 PM

Responding to reports that the Mayor of London is wanting to introduce forms of rent controls in the capital, David Smith, Policy Director for the Residential Landlords Association said: “It is curious that the Mayor is considering introducing rent controls at a time when rents in London are falling according to official data.

“The Labour Party in Wales has previously rejected rent controls arguing that they reduce incentives to invest in new property when we need more and lead to a reduction in the quality of housing. The same would be the case in London.

“All evidence around the world shows that where forms of rent control are in place, decoupling prices from the value of properties hurts both tenants and landlords.

“In the end what is needed is a relentless focus on boosting the supply of housing.”

The most recent data from the Office for National Statistics shows that in the year to October 2018, rents in London fell by 0.2%.  

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Notes:

• The Guardian today reports on a letter from Sadiq Khan to Karen Buck MP (Labour, Westminster North) which hints at him wanting to introduce forms of rent controls in the capital. The report can be accessed at: https://www.theguardian.com/uk-news/2018/dec/10/mayor-sadiq-khan-to-look-at-imposing-rent-controls-in-london.

• The Office for National Statistics. Index of Private Housing Rental Prices, UK: October 2018, can be accessed at: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/indexofprivatehousingrentalprices/october2018. It notes that: “London private rental prices fell by 0.2% in the 12 months to October 2018; unchanged from the 12 months to September 2018.”

• On the 10th February 2015, Lesley Griffiths AM (Labour), the then Welsh Minister for Communities and Tackling Poverty made a statement to the Welsh Assembly introducing the Renting Homes (Wales) Bill. The transcript is at http://www.assembly.wales/en/bus-home/pages/rop.aspx?meetingid=3107&language=en&assembly=4&c=Record%20of%20Proceedings#199863. As part of this, Plaid Cymru’s Housing Spokesperson at the time, Jocelyn Davies asked Ms Griffiths:

“Minister, I wonder if you’ll tell us if you’ve considered rent control methods in the lead up to this Bill and, if so, why it doesn’t appear to be included.”

The Minister replied:

“Okay. I thank Jocelyn Davies for her questions. In relation to rent controls, I do recognise that rent control can look attractive initially, but I think previous experience shows that rent controls reduce the incentive for landlords to invest and can then lead to a reduction in quality housing. Those properties that are still subject to rent control under the Rent Act 1977 are often of the poorest quality, so I think such a proposal would require very careful consideration. Again, I think that could give possible unintended consequences to the supply of private rented properties.”

• The Residential Landlords Association: The home for landlords:

• The RLA represents the interests of landlords in the private rented sector across England and Wales. We’re home to over 50,000 landlords nationwide, with a combined portfolio of over a quarter of a million properties. A growing community of landlords who trust and rely on us to deliver day-to-day support, expert advice, government campaigning, plus a range of high-quality services relevant to their needs.