The Mayor of London has demanded new powers to freeze private rents in the capital for two years.
Sadiq Khan has written to the Housing Secretary Robert Jenrick to seek permission for this change which he claims will help tenants as the economic fallout from Covid-19 continues.
Khan, backed by campaigners at Generation Rent, warns of an “impending tsunami of evictions” once the ban finishes at the end of this week.
This is despite the Government legislating for a six-month notice period for most tenancies.
The Mayor suggests there would be a freeze on rent increases both between and within tenancies, effective immediately, meaning landlords must not charge new tenants a higher rent than the previous tenant.
There would also be an option to extend the two-year freeze if Covid-19 results in the economic outlook for renters not improving, he said.
Freezing rents is not without precedent – earlier this year the Berlin state Government froze rents in the city until 2025, both within and between tenancies.
Khan said: “More than ever, Covid-19 means that many of London’s private renters are facing a really uncertain future.
“More likely to be in lower-paid and insecure work, the end of the furlough scheme means even more renters in the capital are now at risk of pay cuts or losing their job.
“Yet at every stage of this pandemic, renters have been treated as an afterthought by the Government, with protection measures only ever rushed out at the last minute.
“This uncertainty is causing unnecessary anxiety and stress.
“I’m calling on ministers to give me the powers to stop rents rising in the capital for as long as this virus is with us, to give London’s 2.2m renters more financial security.
“If Berlin can freeze rents for five years, there’s no reason London shouldn’t be able to freeze rents for two years in these extraordinary times.”
The move was opposed by the National Residential Landlords Association (NRLA), which highlighted previous studies that show rental stock just limits housing supply.
Chris Norris, policy director for the NRLA, said: “Rent controls would be a disaster for anyone looking for somewhere to rent. As history and experience elsewhere tells us, all they would do is drive landlords out of the market exacerbating an already serious shortage of homes available.
“Rather than driving a wedge between landlords and tenants the Mayor should focus on using the powers he already has to boost the supply of available housing, including for private rent.
“Only then will he make any discernible impact on improving the affordability of housing across the capital.
“We do though support the Mayor’s calls for greater financial support for tenants struggling with rent arrears. In the end this would help them, and the majority of landlords who are individuals and not property tycoons, to sustain tenancies.”
Marc von Grundherr, director at Benham and Reeves, added: “A proposed rental freeze is yet another ill-thought-out plan from a London mayor that has no idea what he’s doing when it comes to the capital’s rental market.”
“His reckless attempt to win votes from London tenants by freezing rents will simply cause more landlords to exit the sector, further reducing the available supply of rental homes.
“It’s this reduction in rental market supply that has already caused rents to climb and while a rental freeze may prevent this from happening in the short term, the further reduction in stock available will lead to far graver problems for London tenants than a few hundred pounds extra in rent.
“Many will find themselves unable to secure a property, with little other choice but to return home or worse, end up on the streets.”
ARLA Propertymark also criticised the proposal.
Timothy Douglas, policy and campaigns manager for the trade body, said: “The Government has provided protection to tenants through the stay on evictions and the job retention scheme, while landlords have fallen outside of Government support.
“It is important to be proportionate to all involved in the sector – tenants, agents and landlords – as the economy struggles to recover in this period.
“It is therefore vital that the situation is not worsened through any measures on landlords as a kneejerk reaction to the conditions created by Coronavirus.
“The vast majority of landlords are supporting good tenants to stay in their properties but a mandatory rent freeze would serve to deter investment in the private rented sector at exactly the time when more is being asked of landlords.”