Getting Rents Under Control: How to Make London Rents Affordable

In the resource titled "Getting Rents Under Control: How to Make London Rents Affordable," published by the New Economics Foundation, the authors present a comprehensive analysis of the growing affordability crisis in London's private rented sector (PRS). The document highlights the increasing number of Londoners living in the PRS, which is projected to become as common as home ownership by 2025. Since 2010, average private rents in London have risen more than three times faster than average earnings, leading to a significant portion of renters facing financial strain.

The report underscores that around 68% of Londoners support the introduction of rent controls, with the Mayor of London, Sadiq Khan, advocating for such measures. The rising costs of private renting have led to approximately a quarter of households spending over half of their income on rent. The affordability crisis is particularly severe in London, where the average rent for a one-bedroom home exceeds that of a three-bedroom home in other English regions.

The authors argue that rent controls could alleviate poverty and enable the transition to home ownership for many Londoners. A staggering 960,000 private renters were living in poverty by 2015/16, with 43% of Londoners in in-work poverty being private renters. The report identifies that high rents also strain public finances, with many tenants relying on housing benefits.

The report outlines six essential building blocks for implementing rent control in London. These include the establishment of a landlord and rents database, property-linked rent control, setting a Desired Rent Level, introducing a Private Rent Index, creating an independent administrative body, and establishing enforcement mechanisms that place responsibility on landlords rather than tenants.

The authors examine various international models of rent control, noting that while some systems have been effective in controlling rent increases, they often come with risks, such as reduced housing supply and potential evictions. Different models are assessed against principles of affordability, security of tenure, feasibility, and equity.

The document highlights that introducing rent controls poses risks, including landlords exiting the market due to decreased profits and reduced maintenance of properties. It emphasizes the need for a carefully designed approach that considers the unique context of London's housing market, balancing the benefits of affordability against potential negative impacts.

The New Economics Foundation concludes that the urgency of the housing affordability crisis necessitates the careful design of rent control measures. The report advocates for collaboration with the Mayor of London and stakeholders to refine and implement recommendations for a fairer and more affordable private rented sector in London. The growing support for rent controls among the public, coupled with a burgeoning renters' movement, suggests that now is a critical time for reform.