NLA to Sadiq Khan: Rent control doesn’t work
Responding to Sadiq Khan’s rent control proposals, Chris Norris, Director of Policy and Practice at the National Landlords Association (NLA), said:
“The cost of housing is high for everyone, whether you rent or have a mortgage, so the frustration felt by so many people in London, and indeed the UK, right now is understandable. We have a general housing shortage, social housing has been in long term decline for some time, and more and more people have no option but to turn to the private rented sector for a home.
“However, it is frankly bizarre that the Mayor of London should choose this moment in time to develop a blueprint for stabilising rents. It is equally odd that the announcement justifying the decision should be based on rent data for the period 2005 and 2016, when according to the Mayor of London’s own housing data private rents in the Capital have dropped consistently from 2016.
“In the year to July 2018 private rents in London fell 0.3 per cent, compared to an average increase in the rest of England of 1.6 per cent. When adjusted for inflation (as published by the Mayor’s team) this equates to a real terms fall of around 2.25 per cent. So by all means stabilise rents, so long as that stabilisation works whether rents are rising or falling.
“It’s often assumed that high rents are the product of landlords’ greed rather than market forces. However, housing costs are seen as relatively high because wages have not kept pace with the cost of supply. Capping the rent which can be charged will alter neither of these factors.
“Artificially suppressing rents sounds like an easy solution, but it would be counter-productive and fails to address the root causes of a lack of affordable housing. In fact, history shows that rent controls stifle the supply of housing and reduce the money available to a landlord to maintain their properties. That benefits no-one.
“The only real solution to the UK’s housing problem is to build more homes whilst bolstering economic growth. The emphasis should be on encouraging more housing in all tenures from a more diverse range of investors and providers.”