Friday 19 July 2019 11:48 am

Sadiq Khan slammed for London rental cap proposals

Mayor of London Sadiq Khan has been blasted as “economically illiterate” after announcing plans to cap rents on homes in the capital.

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Khan today called for the government to give him powers to limit the amount rents can rise in London, which has seen rental prices increase rapidly in recent years.

The 2.4m private renters in London spend 42 per cent of household income on rent, according to government figures, well above the average in the rest of the UK.


But various groups have criticised the mayor’s plans. Marc von Grundherr, director of estate agents Benham and Reeves, said they showed “a real lack of understanding when it comes to the rental sector and wider property market”.

To “deter landlords from the rental space by restricting the income available” will “will only see a reduction in stock and further inflame the issues that we are currently seeing”.

Yet Khan argued that it is wrong that a one-bedroom home in London costs on average the same to rent as a three-bedroom home in the rest of the UK.

“I believe in intervening in market failures,” he told City A.M. “The market’s failed, that’s why we’re intervening.”

He said over two-thirds of Londers supported rent controls in a YouGov and City Hall poll last year. 

The Adam Smith Institute, a free-market think tank, called Khan an “economic illiterate”.

Its head of research Matthew Lesh said in Stockholm, Sweden there is an average wait of 10 years for a rent-controlled apartment.


He said limiting the amount of money landlords can make “would discourage developers from building homes for London’s residents”.

Major intervention

Khan currently has no control over London’s private rental sector. But he today called on government for powers to establish a new “London private rent commission” to work out a way to hold down rents in the capital.

“Existing rents should be gradually reduced and their subsequent levels limited within and between tenancies,” the mayor’s proposals say.

Central to this would be a universal register of landlords and rents to get accurate data about the sector across London.

But critics say Khan has not build enough housing in London, stoking rising demand. Tom Gatzen, co-founder of room-finding website Ideal Flatmate, said: “This demand has pushed rental prices up further and the capital’s tenants are the ones that have paid the price.” 

In response to this criticism, Khan said: “Last year we started building more genuinely affordable homes that at any time since the mayor had the powers to do so.”

“In the mean time you’re going to have people renting privately. So we’ve got to make sure for those renting privately, the rents are affordable in London.”

The London Chamber of Commerce and Industry (LCCI) said Khan’s plans were “an unnecessary intervention that would undoubtedly distort the housing market”.

LCCI chief executive said the moves would “reduce the supply of rented housing further over time and raise housing costs in the long run”.

Read more: Sadiq Khan on course to miss another housing target, critics claim

He said this was a “pre-election, populist measure that places blame on landlords but ignores the problems of the London housing market”.

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