Mayor of London Sadiq Khan yesterday said that rents should be frozen in London to prevent a predicted wave of evictions caused by Covid-19.
He called for new powers to prevent any rent increases for two years in the capital, warning that half a million people could face eviction because of arrears built up during lockdown.
However, critics claim such a move would drive landlords out of the market. For the City A.M. debate, Dan Wilson Craw of Generation Rent and Mary-Anna Bowring of Ringley discuss both sides of the coin.
YES, says Dan Wilson Craw, deputy director of Generation Rent
There is no good reason for landlords to ask their tenants for a higher rent, especially during a public health crisis.
Most landlords in London will not because they see rents in the wider market falling and know that if their current tenant moves out they will lose money.
But a tenant who has lost income will find it difficult to find a new home they can afford or, if they are relying on benefits, a landlord who will take them.
If their landlord asks for a higher rent, their lack of options means that they have little negotiating power to resist the increase.
Generation Rent has heard from renters whose landlords know they are struggling and are using a price hike to get around the eviction restrictions.
The tenant is left with a choice of getting into debt or homelessness.
We all want to minimise hardship and keep people in their homes – that is why we need a freeze on rents.
NO, says Mary-Anne Bowring, group managing director at Ringley
Coronavirus has given Sadiq Khan another excuse to push for a policy he has long wanted: rent controls.
Fundamentally, even a short-term form of rent control like a rent freeze would have the same effect as a longer term policy of rent setting – discouraging investment into the market, and reducing both the supply and quality of private rented accommodation.
The end result would be what we have seen in other cities that have introduced rent controls – a two-tier market, with long waiting lists for regulated homes and a grey or black market of unregulated homes.
The fact is the mayor may not even need to take action to control rents in London.
Market forces are already driving an adjustment in prices, particularly in inner London, with people moving to outer boroughs or even further in search of cheaper more spacious accommodation.
The key to making renting more affordable is boosting the supply of new homes. A freeze would do the very opposite.