Rent controls are popular – but backing them is still a big gamble for Sadiq Khan

London mayor Sadiq Khan. Image: Getty.

Sadiq Khan has kicked off his bid to be re-elected as mayor of London, announcing that he will make rent control a central pillar of his campaign.

On the face of it, the politics are largely positive for Khan: rent control is hugely popular among all voters, and particularly renters, who make up a great and growing slice of the capital’s voters.

But it also represents a big gamble on the mayor’s part. First of all, the London mayor does not at present have the power to control rents. Khan will be running not on a promise to deliver rent control but on a promise to ask to deliver rent control.

It emphasises one of the weakest areas of Khan’s mayoralty: his failure to expand the powers of the mayoralty. In 2016, he pledged to seek further powers from central government over transport, housing, youth justice, probation, the courts, and tax raising. He has received none of them. That’s not really his fault, and it may be that had David Cameron not lost the Brexit referendum in June 2016, then a devolution-minded George Osborne might well have handed over those additional powers and the Khan record would be altogether more successful.

In the real world, however, David Cameron did lose the Brexit referendum and there is no appetite from the present Conservative Party to give Khan further powers – even in areas where there is widespread political and expert consensus that it would be a good thing for the Mayor of London to have and exercise those powers.

In addition, it means making a policy that, while popular, has been consistently found not to work. Rent control incentivises landlords to remove their properties from the private rental market and instead to use them for the tourist market on AirBNB or other listings services, and creates steeper barriers to entry for new tenants.


Rent control does create some winners among renters, but crucially only among existing renters and at the expense of those starting new tenancies. Here, the dire state of tenants’ rights in the United Kingdom and the unintended consequences of rent control could create a particularly toxic cocktail: most renters don’t stay in the same rental contract for long, and it is very easy for landlords to move tenants on if they opt to move out of the private rented sector and into the holiday lettings market.

The policy is popular now, but with more than a full year to go before the next mayoral election, there is no guarantee it will remain so. It’s a boost to Khan that his Conservative opponent, Shaun Bailey, is a weak and a gaffe-prone campaigner; but it is still not certain than a year of public debate about the rights and wrongs of rent control end in a good place for Khan.

More worrying for the Labour campaign is that Khan is selling the pass as far as the question of what the mayoral election will be about. Sian Berry, who finished third last time, will surely hope that a combination of a weak Tory candidate in Bailey, the general feeling that Khan has it in the bag, and growing discontent in the capital with the sub-par efforts to tackle climate change or air pollution by national government, make it an ideal election for the Greens to come second by emphasising their opposition to Brexit and Heathrow; while the Liberal Democrats’ Siobhan Benita will want to do the same.

And in campaigning for a power he doesn’t have, Khan has legitimised his rivals in making issues that aren’t devolved to the capital the centrepiece of their election campaigns as well.

Stephen Bush is political editor of the New Statesman.

 
 
 
 

“Without rent control we can’t hope to solve London’s housing crisis”

You BET! Oh GOD. Image: Getty.

Today, the mayor of London called for new powers to introduce rent controls in London. With ever increasing rents swallowing more of people’s income and driving poverty, the free market has clearly failed to provide affordable homes for Londoners. 

Created in 1988, the modern private rented sector was designed primarily to attract investment, with the balance of power weighted almost entirely in landlords’ favour. As social housing stock has been eroded, with more than 1 million fewer social rented homes today compared to 1980, and as the financialisation of homes has driven up house prices, more and more people are getting trapped private renting. In 1990 just 11 per cent of households in London rented privately, but by 2017 this figure had grown to 27 per cent; it is also home to an increasing number of families and older people. 

When I first moved to London, I spent years spending well over 50 per cent of my income on rent. Even without any dependent to support, after essentials my disposable income was vanishingly small. London has the highest rent to income ratio of any region, and the highest proportion of households spending over a third of their income on rent. High rents limit people’s lives, and in London this has become a major driver of poverty and inequality. In the three years leading up to 2015-16, 960,000 private renters were living in poverty, and over half of children growing up in private rented housing are living in poverty.

So carefully designed rent controls therefore have the potential to reduce poverty and may also contribute over time to the reduction of the housing benefit bill (although any housing bill reductions have to come after an expansion of the system, which has been subject to brutal cuts over the last decade). Rent controls may also support London’s employers, two-thirds of whom are struggling to recruit entry-level staff because of the shortage of affordable homes. 

It’s obvious that London rents are far too high, and now an increasing number of voices are calling for rent controls as part of the solution: 68 per cent of Londoners are in favour, and a growing renters’ movement has emerged. Groups like the London Renters Union have already secured a massive victory in the outlawing of section 21 ‘no fault’ evictions. But without rent control, landlords can still unfairly get rid of tenants by jacking up rents.


At the New Economics Foundation we’ve been working with the Mayor of London and the Greater London Authority to research what kind of rent control would work in London. Rent controls are often polarising in the UK but are commonplace elsewhere. New York controls rents on many properties, and Berlin has just introduced a five year “rental lid”, with the mayor citing a desire to not become “like London” as a motivation for the policy. 

A rent control that helps to solve London’s housing crisis would need to meet several criteria. Since rents have risen three times faster than average wages since 2010, rent control should initially brings rents down. Our research found that a 1 per cent reduction in rents for four years could lead to 20 per cent cheaper rents compared to where they would be otherwise. London also needs a rent control both within and between tenancies because otherwise landlords can just reset rents when tenancies end.

Without rent control we can’t hope to solve London’s housing crisis – but it’s not without risk. Decreases in landlord profits could encourage current landlords to exit the sector and discourage new ones from entering it. And a sharp reduction in the supply of privately rented homes would severely reduce housing options for Londoners, whilst reducing incentives for landlords to maintain and improve their properties.

Rent controls should be introduced in a stepped way to minimise risks for tenants. And we need more information on landlords, rents, and their business models in order to design a rent control which avoids unintended consequences.

Rent controls are also not a silver bullet. They need to be part of a package of solutions to London’s housing affordability crisis, including a large scale increase in social housebuilding and an improvement in housing benefit. However, private renting will be part of London’s housing system for some time to come, and the scale of the affordability crisis in London means that the question of rent controls is no longer “if”, but increasingly “how”. 

Joe Beswick is head of housing & land at the New Economics Foundation.