With Labour Surging, Could Rent Control Come To London?
UK bookmakers give the Labour party a 77% chance of winning an outright majority at the next general election. So what could that mean for rent control measures being introduced in London?
This week, London Mayor Sadiq Khan made another call to be given the power to freeze rents for two years in the UK capital, which he said was needed to curb the fast rise across the city.
The average rent is £2,567 a month, Khan said in a statement, citing data from Rightmove. According to city hall figures, that could jump to £2,700 per month next year, a rise of 5%, less than the current rate of inflation.
Khan does not have the power to freeze rents — that ability needs to be granted by central government. The current Conservative government has said it is against rent control, but that may not matter: The party has a less than 10% chance of being in power after the next election, which must happen before spring 2025, according to the average of odds from UK bookmakers.
Khan is a Labour mayor. The Labour party has not yet set out its election manifesto, though, and remains quiet on its stance regarding rent control.
London's mayor said a two-year rent freeze would save the average London renter £3,374 over the period of the pause. He also called for £4.9B in government funds to be allocated to building affordable housing in London to keep up with demand.
The real estate industry is vehemently against rent control.
“It is an extremely challenging market at present, but the failed experiments with rent controls in the 1960s and 1970s show that the rent-freeze proposed by the Mayor of London is not the answer and would only deter investment into housing in London and further limit supply,” the British Property Federation said in a statement. “The solution to a housing crisis is not to further stall housing delivery.
“Our research shows that rent-freezes have immediate consequences for renters too, with property standards deteriorating and those people trying to enter the market finding it even harder to secure a home.”
Academic research has found that rent control does keep prices lower for existing tenants but can lead to overall increases in rents because developers are less willing to build new stock.