Mayor Sadiq Khan on Friday called for rent controls to be imposed on London landlords to protect tenants, but his plans triggered fury from property bosses who warned investors would be driven away from building new homes.
The industry reacted with shock to Khan calling on the Government for extra powers to cap rents in London. The demand came in a series of proposals including ending “no-fault” evictions. He said: “It is high time for private renting in London to be transformed.”
Khan also floated temporary exemptions from rent controls for build-to-rent homes and tax incentives to encourage investment.
But the industry said the moves would reverse a growing trend of investors coming into the sector to build high-quality rental flats in response to surging demand as many Londoners can’t afford to buy homes.
Angus Dodd, boss of developer Quintain which is building thousands of rental homes in Wembley, said: “There is a lot in the statement. Any measures that restrict the supply of new housing, which would in turn restrict affordable housing provision, can’t be good.”
Alex Greaves, head of of residential investment at M&G Real Estate — backer of several rent projects — pointed out the move “could deter future institutional investment into the sector”. He added: “It will also make renting much more expensive because of the lack of supply coming through from institutions.”
John Dickie at business lobby group London First said: “The answer to London’s housing crisis lies in redoubling efforts to build more homes, not making it harder.”
Adam Challis, head of residential research at JLL, warned: “This will send shivers down the spine of the housing industry and buy to let investors. Rent controls have a long history of driving down the quality of rental homes as landlords can no longer afford to invest in their upkeep.”
Khan would need parliamentary support to gain new powers, unlikely under the current administration. Conservative mayoral hopeful Shaun Bailey attacked the plans. “Implementing them would take a bad London housing situation and make it worse. It would drive landlords out of the market and lower the standards of the flats left on offer. This reality is why economist Assar Lindbeck called rent controls ‘the most effective technique presently known to destroy a city — except for bombing’.”
The British Property Federation’s director of real estate policy Ian Fletcher warned: “The build-to-rent sector is now delivering 20% of all new homes in London, with 74,500 build-to-rent homes either completed or planned. If long-term, sustainable investment into new rental housing is deterred, this would take London further away from resolving the underlying housing issue of our time — a lack of supply.”