64% Of Londoners Back Rent Control

Rachel Holdsworth
By Rachel Holdsworth Last edited 40 months ago
64% Of Londoners Back Rent Control

'Bijou property, well ventilated, excellent views. £1,000 a month'. Photo by Steve Reed from the Londonist Flickr pool

The idea of rent control seems to be gaining in popularity, according to a new survey.

The national poll for Generation Rent (PDF) showed that 59% of the 1,009 people interviewed either strongly or somewhat supported rent control. Just 6.8% either strongly or somewhat opposed, with 34% having no opinion. Unsurprisingly, Londoners are even more in favour, with 64.5% thinking it's a good idea. Support isn't necessarily a sign of self interest either: across the country, over half the home owners surveyed were in favour — with 77% of private renters in favour. (What's perhaps more surprising is that there are 23% of private tenants who aren't. It's probably a lot less in the capital, but we don't have that breakdown.)

Why do Londoners like the sound of rent control? Just one look at spiralling costs can tell you that, as the market reacts to a ridiculous lack of supply for everyone who needs a place to live. Diane Abbott backed a form of control only last month. The primary drawback with rent control is that it's claimed introducing limits on how much landlords can charge would prompt many of them to sell up, which would reduce supply (the last thing we need).

The problem (OK, one of the problems) with the UK's rental market is that the vast majority of landlords own one, or maybe two, properties. It's practically an amateur industry. These small landlords don't have the economies of scale to absorb squeezes on how much they can whack the rent up by, so it would be tempting to sell. Of course, this could have upsides. Some of those renters might be able to afford to buy their own place, especially if a sudden glut of landlords selling up prompts a fall in house prices. And, frankly, some of the small landlords don't know what they're doing, and tenants would be better off without them and living somewhere run by a major, institutional landlord. We just need to build more of those rental-only, normally-priced blocks first. It's as if everything comes down to building more houses...

Last Updated 03 January 2015

Robert Woolley

The evidence from last time round (Rent Act 1977) is that rent controls coupled with high security of tenture tend not to work. They reduce supply. The way to solve the problem of skyrocketing rents is to build more - which means planning relaxation and potentially some form of restrictions on foreign ownership. Increase supply of all types of tenures...

Lucy

I disagree that we need more large landlords who own lots of properties. In my experience, those tend to be the worst! A) owning lots of properties gives them more power to hike up rents etc. B) they care purely about the profit margins & not so much about the state of the properties - often avoiding repairs and finding every opportunity to keep the tennant's deposit for things that are just normal wear & tear or just made-up reasons.

Ruth

Anyone who actually works with Planning knows that Planning is not what's preventing building more houses. Relaxation will only exacerbate the situation.

Mark

As I've said before - I'm not a great fan of rent controls for a two key reasons:
- It may force some landlords to exit the market, further constraining supply
- It reduces incentives for landlords to properly maintain and renovate their properties (case in point - NYC)

I am massively in favour of buildings full of rented apartments being managed by institutional investors, who can achieve decent scale economies and provide a generally more professional level of service.

But how to encourage these, increase the overall supply and suppress rents? What if we changed planning conditions such that if an institutional investor were to build an entire building for private rent only (i.e. no sales of individual flats), developers would be released from obligations to provide x% social / affordable housing?

I suspect that such a difference in rules is the very reason why so much money has been ploughed in to luxury student accommodation in London by institutional investors in recent years - developers of such accommodation do not have to provide social / affordable housing, so is much, much, more attractive for investors who're looking to build a building for the rental market.

londona729

If rent controls led to some buy to let landlords selling their properties, couldn't this lead to land and property prices falling( or at least increasing at a slower rate) due to the increase of housing for sale.

Wouldn't this possibly mean quite a few renters becoming homeowners due to the lower house prices? (Especially if Buy-to-Let landlords were put off buying up property and possibly reducing demand for rental property in the process)
...As well as house building been encouraged by a fall in land prices (the most expensive part of creating new property).?

Richard

Why stop at rent control? There are lots of restaurants that are way too expensive for average Londoners to eat in. Many in up and coming areas have changed their menus and increased their prices significantly meaning some customers are unfairly forced to eat elsewhere.