Mayor of London Sadiq Khan is looking into how rent controls could reduce poverty and gentrification in the capital, it has been revealed.
In a letter to Karen Buck, Labour MP for Westminster North, Khan said the reasons to approach private rent stabilisation strategically are “overwhelming”, before pointing out that he had “long advocated such reforms; in 2013, [he] suggested reforms could give renters the right to longer-term tenancies and predictable rents”.
Radical remodelling of the private rent structure across the capital could mean introducing open-ended tenancies and an end to ‘no-fault’ evictions, which were found by housing campaign group Generation Rent to leave 216 families homeless every week.
It could also mean getting a handle on astronomical – and still spiralling – rent rates in the city, which drive poverty, exacerbate inequality and cultivate gentrification.
Rent control advocates often take inspiration from the controversial but relatively successful law brought in by Germany in 2015. It stipulates that landlords can’t charge new tenants any more than 10 per cent of the average price of a similar property in the area.
Prior to its introduction, average rents in some areas had risen by almost 50 per cent over a decade, and Berlin’s population has been increasing by 40,000 a year. Only 43 per cent of Germans own their homes – compared to 70 per cent in the UK.
Within just one month of rent caps being implemented in Berlin, a three per cent drop in average rent prices was recorded. Private rental rates have since grown organically along with inflation but the restriction has kept them from spiralling, resulting in a market which is fiercely competitive but affordable.
But German Institute for Economic Research findings showed that the country-wide legislation only had an impact in areas where rent was already well outgrowing inflation. Researcher Konstantin Kholodilin said that Germany’s housing crisis could only be solved if the government increased incentive to build new housing, something which is “simply unavoidable” – and may ring true with London renters in particular.
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However, radical rent caps for London may not be on the horizon immediately: Khan is said to be “frustrated” by his lack of power to help the 2.4 million Londoners who rent their homes privately. James Murray, Deputy Mayor for housing & residential development, told The Big Issue that the Mayor “believes [renters] are being let down by a legislative framework which is out of date and not fit for purpose”.
Murray added: “Although he has no powers over tenancies or rent levels, his ‘London Model’ will set out a proposed blueprint for reforming tenancies, which he will urge Ministers to adopt.
“However, security of tenure cannot be separated from affordability and the huge pressures Londoners face from rising rents. Once his ‘London Model’ work is complete in spring 2019, he will consider what measures to campaign and lobby for to help address affordability in London’s private rented sector.”
Khan previously fought to ensure access to interest-free tenancy deposit loans for 100,000 Londoners, as well as introducing the Rogue Landlord and Agent Checker – the UK’s first such public database which has been checked more than 60,000 times.