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Sadiq Khan confirmed earlier this week he would put together a blueprint which would look at stabilising and controlling rents for the 2.4 million private renters across the city.
The move comes following a new poll which found that 68% of Londoners were in favour of capping the amount private landlords could charge tenants.The mayor currently has no powers to implement rent control in London by himself but has vowed to campaign and lobby for the proposals to be accepted and implemented by the government.
Mr Khan said the arguments for rent control were “overwhelming” and that it was “vital the government acted to improve the quality of millions of lives”.
The percentage of Londoners now living in private rented accommodation in 2017 was 27%, up from 15% in 2000.SourceDavid Cox, CEO of ARLA, said: “Rent controls do not work; they hits hardest those designed to help the most, and political parties advocating such systems have failed to learn the lessons of history.
“The last time rent controls existed in this country, the private rented sector shrunk from 90% to 7%.
“At a time of demand for PRS homes massively outstripping supply, rent controls will cause the sector to shrink.
“In turn, this means professional landlords will only take the very best tenants, and the vulnerable and low-income people that rent controls are designed to help, will be forced into the hands of rogue and criminal operators, who may exploit them.”Source
Responding to these reports, John Stewart, Policy Manager 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 in real terms 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 December 2018, rents in London increased by 0.2%, well below inflation.SEE ALSO - Pros and cons of rent controls?UP NEXT - Rent controls would leave tenants WORSE offDON'T MISS - Return of rent controls?!NOW WATCH:
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
I forecast rent control a long time ago
it will come just as landlords put up rents to cover s24
sorry to say I told you so
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.
Well you were not the only one. We were both poo pooed that the time. Now for all those disbelievers welcome to the real world. I remember when they were in place before so its nothing new to me.
Nothing is new here apart from S24
the PRS has seen it all before just a lot of investors are either to young or daft not to relise that past history can repeat itself
i invested in the old times I know what rent control is and secure tenancy
that’s why the average joe did not invest in property and banks would not lend
its all down to one document and that’s the AST alter that and BTL is finished
I think we are late for the party with our BTL, property developing business. Everything is design to make LLs life harder and their business less profitable. What is worst, people's perspective has shifted and being a landlord become almost shameful profession.
This neglected, un inhabitable house we are going to buy stayed empty for 6 months. There will be another house on the market if we were buy it and refurbish. It is a win- win. No first buyer will buy neglecteed house for 500k. A house that needs another 20-40k to be habitable. Fighting Landlord is not a solution to a problem of high rents but politiciant have obviously their agenda doing just that.
I came to the firm conclusion that my services as a landlord are no longer required
yes they are after our blood
Clearly political point scoring, but it's a tough one as rents can get absurdly high in London. It's unsurprising there's a growing backlash amongst tenants but with yields so low already in the capital, I'd imagine more landlords will just sell up. Would be interesting to hear the build to rent sector's response to this...
Ruban Selvanayagam - Co-Founder of Property Solvers and Head Blogger of The Property Investor's Blog
Good point Ruban. This could curb the Build to Rent sector in London if it is applied to them.
A number of Housing Assocs have diversified their activities via separate offshoot companies doing BTR for private rent/private sale - in order to boost their coffers so as to boost their core activities (so they say!)
Housing across Greater London's 600 sq miles today harks back to the milestone year of 1971 when UK reached 50% home ownership - given that around half of London residents still live in rentals - roughly 50/50 split social v private just like early 1970s UK.
Today though that makes London very anomalous with UK overall in having such a heavy rental bias.
Across the whole of UK we have 4.7 million HB/LHA claimants - almost half of the circa 10 million total rentals (social& private combined).
DWP say that only 23% of those claimants are in working households - suggesting that many London tenants are being paid to remain in London without a core need to reside there - though the combo of capped LHA/OBC are forcing thousands of poorer households to vacate London/SE. Of those households directly affected by OBC some 46% are in social housing.
Would an x% increase apply a tenant's actual rent or the market rent at the point of legislation?
Not that I want or intend to hike up the rents to some of my long-standing tenants who are currently paying £400pm below market rent, but it would be ridiculous if, for instance, the cap is 3% and I'd then be prohibited by law from demanding 10%, which would still mean the rent is £350pm below market value.
As always devil in the detail - though Khan can demand what he likes but without Govt approval nil happens.
Noteworthy is that social rents since 1979 doubled every 9 yrs on long term average (8% cagr).
In bigger picture Govt can legislate till cows come home - but they cannot force investors to become nor remain landlords.