Rent controls will put a stranglehold on London

Published by freemarketconservatives on

BY ANDREW BOFF

Like most things Sadiq Khan does, this latest and frankly desperate move is nothing more than a cynical piece of grandstanding and political gameplaying. When the Mayor was a Member of Parliament, he was part of a government which ruled out introducing rent controls on account of the fact that they simply don’t work, and indeed never have. Khan knows that this government, like the last Labour one, will never agree to rent controls, but hopes that their refusal will enable him to initiate a political row and ultimately score some cheap political points.

Londoners are intelligent people and will be able to see straight through this pathetic charade. Far from focusing heavily on the niche and outdated issue of rent controls, May will be a referendum on the Mayor’s inability to stem the growing number of young people being stabbed to death on the streets of London. It will be a referendum on Khan’s utter failure to hit his housing targets and upgrade our creaking transport system. In other words, Londoners will be judging the Mayor on those things he has been responsible for over the past four years, not what he would like to have control over for naked political reasons.

But seeing as the Mayor has raised the issue of rent controls, it is worth exploring why the policy, in any form, would be an unmitigated disaster for London. 

It’s not just those of us on the centre-right who oppose artificially suppressing rents; experts and commentators from across the political spectrum have repeatedly pointed out that rent controls simply do not work. Looking across the globe, it is hardly a surprise that there is somewhat of a consensus in opposition to the policy, in whatever form it takes.

Take Paris as the first example. Rent controls were introduced solely in central Paris, which resulted in rents increasing exponentially in the suburbs, where no controls were in place. If Sadiq Khan applied rent controls across Inner London where prices are highest, Londoners in boroughs like Bexley, Bromley, Sutton and Havering would be hit in the pocket, as rents in those areas would inevitably start to increase. Even if the Mayor was to freeze rent prices across the whole of Greater London, it would be the already high rents in the south-east which would start to creep up.

The imposition of rent controls can result in outright discrimination towards new tenants. In Berlin, landlords had no control over what they charged existing tenants and compensated for this by fleecing new tenants. Berlin rents had been rising by just one to two per cent each year, but as soon as the rent brake was introduced in 2015, new renters were hit by a 10 per cent jump in prices. It is already the case that too many people are unable to live in our city because of the high cost of living, and this sort of shift would just exacerbate the problem. London most definitely would not be open.

While rent controls could ironically see rents rocket, they would almost inevitably see the number of properties available for rent plummet. In San Francisco, rent controls meant that renting out properties suddenly became unprofitable for landlords, who were forced to find more lucrative ways of using their properties. As a result, the number of properties available for rent dropped by a staggering 15 per cent as landlords increasingly sold their houses and flats to owner-occupants or redeveloped the buildings.

Any Londoner who has rented in our city will know that the quality of the rental properties desperately needs to improve, not decline. But academics at Stanford University found that there is a direct correlation between rent controls and deteriorating property standards, as landlords are starved of the money they need to invest in maintenance and improvements. Suppressing rents has consequences, and poorer property standards are just one of them.

Anyone with any understanding of housing knows that the way to make London more affordable is to build more homes. Sadiq Khan knows this too, but he has utterly failed to deliver. He’s consistently missed his own housing targets, failed to complete the majority of homes he has managed to start and presided over a shameful drop in the number of new family-sized homes. Considering this embarrassing record combined with Khan’s penchant for shirking responsibility, is it any surprise that he’s gearing up to use the issue of rent controls to pin the blame for London’s housing woes on the government?

The Mayor of London is one of the most powerful politicians in the country, with an £18 billion budget and an enormous array of powers. London deserves a Mayor who possesses the ability to use their position to deliver real change for our city, rather than the ability to pass the buck, indulge in petty game-playing and pursue populist and flawed policies such as artificial rent suppression.                      

Andrew Boff is a Member of the London Assembly. Follow him on Twitter @AndrewBoff      


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