At the beginning of the year London Mayor Sadiq Khan said he would make the introduction of rent controls a key part of his mayoral re-election campaign.
The build-to-rent sector is not a fan. The British Property Federation has been highly critical, saying potential new investors to the sector, particularly global investors, might be deterred from investing.
The situation is not black and white. Bisnow’s Build-To-Rent Annual Conference last week heard from two global investors, one of whom said rent controls would not necessarily deter them from investing, one of whom was vehemently against. Here are their views.
Martine Philibert, Senior Vice President, Ivanhoé Cambridge
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“Two of our biggest markets are New York and San Francisco, and we like these regulated environments because you know what the rules are. As long as the rules are clear and applied with a constant basis so as an investor you have no surprises and you know what you are getting yourself into then it is not a problem.
“London should look at some of the other major cities to see the do's and don’ts. I would say Montreal’s rent regulation is the worst. New York’s has been changing over time, and we even created a new type of affordable apartment lease for Peter Cooper Village — we negotiated with the city to create something that is tailor-made for that property. San Francisco is interesting, there is a lot of pressure in Silicon Valley for a new type of rent regulation. I would say that a national or too-wide regulation doesn’t work; you need something that fits the specific area.”
Steven Ivankovich, Chief Executive, Atlas Residential
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“If you want to destroy the rental apartment industry here you’ll put in rent controls. Common sense, years of anecdotal evidence and hard data say that. You will decrease supply, new entrants won’t come in to the market while there’s still a lot of demand there. You don’t incentivise people to own these buildings or take the risk of building them, you create a huge regulatory burden on operators dealing with rent controls. The list is vast.”
Freakonomics recently took a deep dive into the pros and cons of rent control in a podcast that can be found here.
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