Despite private sector rents routinely devouring more than half the income of London households, there is little lobbying for a renewed rent control regime. We would not expect the regulation-phobic Boris Johnson to be a fan and he re-confirmed his view only last month:
Where rent control has been tried, it has limited the supply of rented homes and led to the deterioration in the quality of properties.
But scepticism is not confined to free market believers like the Mayor. Patrick Collinson reported earlier this month that a forthcoming research paper on the private rented sector from Shelter "is expected to focus more on giving tenants greater long-term security, and encouraging large-scale institutional investment in rental properties, rather than calling for price controls." The National Landlords Association [NLA] is strident in its opposition, with its head of policy saying "Government intervention through rent controls would be counter-productive to encouraging supply at a time when it is so badly needed.'
Even Ken Livingstone, who said during the recent mayoral campaign that he favoured rent controls, pledged something different in his manifesto. His not-for-profit lettings agency policy, an excellent idea very much in line with one of the proposals made by Shelter during the election campaign, would have had the effect of holding rent levels down, but was not a rent control mechanism as such. Labourite housing policy experts tend to be cautious about these for reasons very similar to those that make the NLA so anti.
So why bother even considering rent controls for addressing this aspect of London's housing crisis? It's worth noting that rent controls do actually operate all over the country, including the capital. Thanks to the Rent Act (1977), private sector tenancies that began before 15 January 1989 have rent increases limited to an amount linked to the Retail Price Index. One result is that a one-bed flat overlooking Hampstead Heath costs £348 a month under this "fair rent" rule while the landlord of a similar flat nearby can ask for £1,516 a month. Needless to say, the gap between "fair rent" and market rent is particularly huge in London. Regulated tenants are also protected against eviction as long as they pay their rent on time and don't wreck the place. Disputes are settled by a London rent assessment panel.
There are an estimated 100,000 tenancies in the UK to which "fair rent" still applies. I haven't yet found a figure for the number in London, but Robert Taylor of the Camden Federation of Private Tenants estimates the figure at between 2,000 and 3,000 in his borough alone. He describes the system as "far from perfect," but nonetheless very effective in protecting tenants, many of whom are now elderly, against steep and arbitrary rent increases.
Robert also argues that landlords don't do badly out of the arrangement either. "At the moment they are achieving 7-8% annual rent increases if they apply for them," he says, adding that they can raise rents by more if they are able to show that they've improved the property. "Rent control is not as draconian as some would have you believe," he concludes.
Mayor Johnson's preferred remedies to the problems of the private rented sector are to improve supply and quality by "encouraging investment and extending landlord accreditation." Formal rent controls may have fallen from favour, but it remains to be seen if the Johnson approach produces better results.
FAIR USE NOTICE. Tenants Together is not the author of this article and the posting of this document does not imply any endorsement of the content by Tenants Together. This document may contain copyrighted material the use of which may not have been specifically authorized by the copyright owner. Tenants Together is making this article available on our website in an effort to advance the understanding of tenant rights issues in California. We believe that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.