A few cheers erupted around the office here at the Mayor’s call for rent controls. You can understand why: millions of Londoners unable to afford to buy are being forced to rent, and are spending a fortune doing so — for a quarter of them, it’s half their monthly pay.
The typical renter is no longer just a young singleton. By 2025, 40% of Londoners will be in rented homes. Families unable to get on the ladder are increasingly being forced to rent, often in tiny flats because they can’t afford a family-sized place.
Housing simply isn’t working in this city. The Mayor is right to highlight this, but his solution — rent controls — is the wrong one.
While it may sound appealing in the short term, experience from around the world teaches us that it just doesn’t work.
Primarily, it fails to address the core issue, that prices are high because there isn’t enough supply.
If you get more rental properties built, rents will fall. But if you cap rents, you put investors off building new homes; particularly the big overseas funds who can deploy their cash elsewhere.
Buy-to-let landlords fearing the new regime will sell up to owner-occupiers, reducing stock even more.
The Mayor should do more for renters’ financial pain by demanding councils speed up the planning process and getting more development done on property he controls on Transport for London land. He should be reassuring investors that London is a safe place to build, rather than rocking the boat with radicalism.
New building starts are already low under this Mayor. Why not do more to fix that, rather than make electioneering demands for rent controls which just won’t work?