A new report into rent controls found that a number of landlords would sell all or some of their properties immediately.
A number of others would gradually reduce their portfolios.
The research asked 174 London landlords how they would respond to a range of possible rent control scenarios.
These were:
- Rents for existing tenants increasing in line with annual inflation (currently 0.3%)
- Rents on all properties, including lets to new tenants, only increasing in line with inflation
- All rents frozen for three years
- All rents reduced to two-thirds of current levels, and thereafter rising only in line with inflation.
In each scenario, some landlords said they would make a loss.
In scenario one, just under 60% of landlords said they would carry on as they are, with over 40% looking for an exit. In the least popular fourth scenario, only about 15% said they would continue as at present, with the remainder seeking to get out.
The second least popular scenario was a three-year freeze on rents.
The research noted that if there was a forced reduction in rents, as in scenario four, there would be a housing market “shock”.
Interestingly, the research also found that 39% of landlords made a deliberate decision to buy rental properties using mortgages – suggesting that almost double the number of landlords will be affected by the forthcoming tax crackdown announced in the Summer Budget.
The Treasury insists that only 20% of landlords will be affected.
The new research also suggests that a surprising percentage of London landlords fall into the accidental category – altogether 29%.
The research, by the Cambridge Centre for Housing and Planning Research, for the London Assembly, can be found here
Given how much capital growth most London landlords are sitting on, and the very low yields for normal lets (not HMOs) – it should not take much to get a lot of London landlords to sell up.
I don’t think landlords drive prices in London, so lots of landlords can exit slowly without the bottom falling out of the “for sale” market.
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Do you have any idea how difficult it would be to get legislation to cap rent? Next to impossible, there would be so many legal battles not just with landlords. It would also breach one of the fundamental rights of European legislation. Rents cap themselves with affordability.
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Watch to see what happens in Scotland. I remember the 1970-80’s when rent control existed and to some degree it still exists with regulated tenancies/ assured tenancies. I remembers rents in Greenwich/Lewisham being less than £10.00 per week under rent control. This is the UK and they will legislate around anything the EU has to say, indeed I think I might be right is say rent control may already existing in some EU countires? perhaps someone with European housing knowledge can post a view.
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