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  • London Property Market

    Khan: Rent controls for London on agenda



    In a letter to MP Karen Buck, seen by the Guardian, the mayor of London, Sadiq Khan, said it was necessary to adopt a “strategic approach to rent stabilisation and control.

    He added that the argument for capping rent increases at inflation is “overwhelming”, and the paper reported he is also considering scrapping ‘no fault’ evictions.

    Full/source article 

    Excerpt from letter to Karen Buck, MP:

    “I agree with you that London needs a strategic approach to rent stabilisation and control,” he wrote in a letter to Karen Buck, the Labour MP for Westminster North, seen by the Guardian.

    “I have long advocated such reforms; in 2013, I suggested reforms could give renters the right to longer-term tenancies and predictable rents. The housing crisis is now having such an effect on a generation of Londoners that the arguments in favour of rent stabilisation and control are becoming overwhelming.”

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    If they bring in a cap on rent increases at inflation, guess what the rate of rent increases for all tenants will be each year...  I say bring it on, I think it will increase rents.

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    There's a maximum council tax rise per annum which is now being utilised by most councils due to Govt spending cuts.

    And annual railway ticket price increases, that's set in stone! Again due to cuts/increased costs.

    By allowing rents to go up by say 3% why wouldn't LLs increase? It's good enough for the above so why not us?

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    Rent control will come

    but at what rate

    the councils have years of data to use and my own guess is a rate just above LHA will be introduced in the future

    this report is London based but I think it will roll out beyond

    I have warned about this for some time

    landlords today who are expanding should bear this in mind look at LHA rates for your area and if the deal dosent stack up don’t buy is my advice.

    Who would appose rent control?  only landlords in general

    But who listens to our options anyway?

    We have far more bad news to come in our sector

    So plan ahead for the worst because that’s what I am doing ... and hoping for the best

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    I can't see rates just above LHA for all properties being a reality. What would the large institutional investors have to say to their friends in government about this!

    Rates just above LHA would suggest that, for example, a small tiny mediocre quality unfurnished 1 bed at Council tax band A would have the same rent cap as a large luxury high quality furnished 1 bed on council tax band E, can't see this happening in a million years.

    More likely that rents will not be allowed to rise more than inflation once a year, as indicated in the article.

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    That is not how LHA works - rents vary from SAR rate to that for a max 4 bed property - but in SE are around 20% below market rents.

    So every postcode has 5 different LHA rates by bedroom number.

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    If labour comes to power I don’t think they will give the prs a chance

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Across Greater London LHA rates are 20/30% below market rents.

    Khan is clearly unaware that PRS fell from 78% of all housing to around 8% during the 75 yrs of rent caps/controls from 1915 onward.

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    Worth reminding people that in Kingston a new build 2 bed social flat has rent £1000 pcm.

    Average wage in Outer London is £24400 pa - so that rent is 49.2% of gross earnings - way above a generally accepted affordability level around 35% of gross earnings

    Outer South West London BRMA

    Shared Accommodation Rate:
    £90.08 per week
    One Bedroom Rate:
    £216.06 per week
    Two Bedrooms Rate:
    £280.60 per week
    Three Bedrooms Rate:
    £336.96 per week
    Four Bedrooms Rate:
    £429.53 per week
    • Downloads about the Outer South West London Broad Rental Market Area (BRMA):

      • https://lha-direct.voa.gov.uk/dg_css/ima...icon.gif); background-origin: padding-box; background-position-x: left; background-position-y: 0.3em; background-repeat: no-repeat; background-size: auto; color: rgb(255, 91, 0); font-size: 12px; margin-bottom: 2px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 9px; padding-right: 0px; padding-top: 0px; text-decoration: none; width: auto;" href="https://lha-direct.voa.gov.uk/DownloadHelper.aspx?file=%2fDocsTemp%2fMAPS%2fMAP%7e152%7eOuter%2bSouth%2bWest%2​bLondon%7e2009-11-01.pdf" data-cke-saved-href="https://lha-direct.voa.gov.uk/DownloadHelper.aspx?file=%2fDocsTemp%2fMAPS%2fMAP%7e152%7eOuter%2bSouth%2bWest%2​bLondon%7e2009-11-01.pdf">BRMA map (the area where this LHA rate applies)(185.3 KB, (PDF))
      • https://lha-direct.voa.gov.uk/dg_css/ima...icon.gif); background-origin: padding-box; background-position-x: left; background-position-y: 0.3em; background-repeat: no-repeat; background-size: auto; color: rgb(255, 91, 0); font-size: 12px; margin-bottom: 2px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 9px; padding-right: 0px; padding-top: 0px; text-decoration: none; width: auto;" href="https://lha-direct.voa.gov.uk/DownloadHelper.aspx?file=%2fDocsTemp%2fRATS%2fRAT%7e152%7eOuter%2bSouth%2bWest%2​bLondon%7e2009-11-01.pdf" data-cke-saved-href="https://lha-direct.voa.gov.uk/DownloadHelper.aspx?file=%2fDocsTemp%2fRATS%2fRAT%7e152%7eOuter%2bSouth%2bWest%2​bLondon%7e2009-11-01.pdf">Information about the BRMA (232.4 KB, (PDF))
    • https://lha-direct.voa.gov.uk/dg_css/ima...icon.gif); background-origin: padding-box; background-position-x: left; background-position-y: 0.3em; background-repeat: no-repeat; background-size: auto; color: rgb(255, 91, 0); font-size: 12px; margin-bottom: 2px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 9px; padding-right: 0px; padding-top: 0px; text-decoration: none; width: auto;" href="https://lha-direct.voa.gov.uk/ListofRents.aspx?SearchResultsPageParameters=true&Postcode=KT1&LHACategory=999&Month=12&Year=2018&SearchPageParameters=true&BrmaId=152" data-cke-saved-href="https://lha-direct.voa.gov.uk/ListofRents.aspx?SearchResultsPageParameters=true&Postcode=KT1&LHACategory=999&Month=12&Year=2018&SearchPageParameters=true&BrmaId=152">List of Rents - view a graph of the rents used to set the LHA rate for Outer South West London

    d 35% of gross income.


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    RESPONDING to reports that the Mayor of London is wanting to introduce forms of rent controls in the Capital, David Smith, Policy Director for the Residential Landlords Association said:       

    “It is curious that the Mayor is considering introducing rent controls at a time when rents in London are falling according to official data.

    “The Labour Party in Wales has previously rejected rent controls arguing that they reduce incentives to invest in new property when we need more and lead to a reduction in the quality of housing. The same would be the case in London.

    “All evidence around the world shows that where forms of rent control are in place, decoupling prices from the value of properties hurts both tenants and landlords.

    “In the end what is needed is a relentless focus on boosting the supply of housing.”

    The most recent data from the Office for National Statistics shows that in the year to October 2018, rents in London fell by 0.2%.

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    Logic does suggest that more housing stock would tend to lower prices - but polar opposite happened post WW2 across UK.

    In past 50 yrs UK added 2/3rds to original housing stock (extra 10 million homes) but average prices rose pretty relentlessly (allowing for odd hiccup).

    That despite a c.30% drop in average occupancy rate down to average 2.4 persons per dwelling today - albeit average differs slightly by tenure as flagged in EHS 2016/17.

    From late 1980s onward we saw a big decoupling in property price growth from wage growth - and a look at average annual wage growth from peak 1970s onward flags that rate of wage growth halved in each decade after 1970s.

    Flatlining mortgage rates nowadays superficially suggests that property loans are not much more expensive to service than in a past era - but that would ignore the MMR affordability criteria which seems in practice to limit loans to no more than 4 times earnings - and nationally average FTBs earn around 27% of purchase price of their first home.

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