Sadiq Khan: Rent controls in London could set a precedent for the rest of England
05-06-2021
London Mayor tells i from the campaign trail: ‘The Government has shown it views housing as a commodity rather than a necessity’
Sadiq Khan has pledged to prioritise key workers for some affordable housing (Kirsty O’Connor/PA Wire)
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By Vicky Spratt
Housing Correspondent
Sadiq Khan has suggested the introduction of rent controls in London could be used as a blueprint for other cities across the country where housing is becoming increasingly unaffordable.
The Mayor of London, who is gearing up for the local elections in May, has called for the power to implement rent controls in London, which he told i “could be a good template for how to do things across the rest of the country”.
London is the epicentre of the UK’s housing crisis, with the average asking rent now at £2,219 per month in inner London and £1,723 in outer London. While these rents are down on pre-pandemic levels, they are still unaffordable for many people on low and middle incomes.
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But the unaffordability crisis has been spreading to other major cities, including Newcastle and Bristol, which saw the greatest rent rises in 2020. In Bristol, research from Zoopla found that rents in the city rose annually to £1,008pcm. During the pandemic rents have also risen in other cities as people have left London, as well as more rural areas.
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Serving as London Mayor since 2016, the housing crisis is something that Mr Khan – who is currently running for re-election – has seen up close. He has long been an advocate for the introduction of rent controls in the capital, despite not having the power to introduce them.
“I’m in favour of the Government giving me the powers to bring in rent controls,” he explained. “I think we’ve got to recognise that London is different to the rest of the country in terms of housing need.
“The average cost of a one-bedroom home in London is more than the average cost of a three-bedroom home in the rest of England.”
Mr Khan has also pledged to prioritise key workers for affordable housing in London, known as intermediate affordable housing, which is based on local average earnings and aimed at those who struggle to pay private rents but do not qualify for social housing.
The average median cost of a flat in London is £426,000. This can be more than 11 times a firefighter’s annual wage, more than 12 times a teacher’s salary, and more than 13 times a nurse’s income.
Mr Khan ran a consultation on intermediate housing for such workers in the second half of 2020 in his role as Mayor and this policy has come out of that. Homes provided as intermediate housing would be available at the ‘London Living Rent’. This is pegged at one-third of median local household incomes in each council ward. The average monthly rent for a two-bedroom London Living Rent home is £1,050, roughly two-thirds the private market rate.
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“One of the things I have recognised from speaking to NHS workers, teachers, people working in the transport sector, shop workers and many other keyworkers who have done an amazing job over the last 14 months and been on the frontline, taking risks with personal wellbeing to keep our city going during the worst parts of this pandemic, is that they may not qualify for social housing because they earn too much.
“But, at the same time, because they rent and don’t have enough savings they can’t afford to buy. So – if I am re-elected – I will put keyworkers at the top of the queue for intermediate London Living Rent homes.”
“We need to keep keyworkers in London,” Mr Khan added. “What we can’t have is them moving away from London because they can’t afford to live here or living on the outskirts of the city and travelling an hour and a half each way. We need them in the centre of our city.”
London is where some of the country’s most expensive homes are. Due to a chronic shortage of social housing, at the end of last year the number of London households who were homeless and living in temporary accommodation reached its highest level in 15 years at 62,670. That figure accounts for two thirds of England’s total temporary accommodation numbers.
“Rents may have fallen slightly in London during the pandemic,” Mr Khan explained, “because some Londoners have temporarily left the city […] but this is only a temporary blip. My worry is that in a few months’ time hopefully we will have an [economic] recovery but we will be in the situation we had before.”
Mr Khan was given £4.82bn in 2016 by central government to build 116,000 affordable homes by 2022. However, figures from the Greater London Authority show City Hall had only begun building 56,239 as of December last year. There have been obstacles including the lockdowns of the pandemic and, prior to that, the looming threat of a no deal Brexit.
In the year to March 2020, 17,256 affordable homes were started. This exceeded the Mayor’s own target of 17,000. As City Hall noted this meant more affordable homes were started in 2019/20 than at any time since records began in 2002/3. Mr Khan’s campaign has made much of this achievement. If he wins, he has promised to explore the establishment of a new fund to help local authorities buy back homes sold under the Right to Buy scheme.
Of the homes started during this period, City Hall figures say 70 per cent were at social rent levels, with the remainder a mixture of shared ownership, London Living Rent and other affordable homes. London Living Rent is cheaper than private rent, but it is generally not as affordable as social rent.
Mr Khan acknowledges that what is happening to the affordability of housing in London is part of a national story with other cities like Bristol and Manchester struggling to provide affordable housing too. Until there is enough social housing, national rent regulation via “rent pressure zones”, he said, like those implemented in Scotland could help.
In Scotland, local authorities have very recently been given to power to introduce ‘Rent Pressure Zones’ to cap rent increases for tenants if rent rises are causing problems for tenants or putting pressure on the council to provide or subsidise housing.
“In Scotland everyone was predicting that rent caps would lead to disaster, but it hasn’t. What rent pressure zones have done is given power to particular areas to limit rent rises – Edinburgh and parts of Glasgow are good examples…it’s something for the Shadow Housing Minister to discuss with respective mayors and leaders across the country.”
“I don’t think civil servants in Whitehall or politicians in 10 Downing Street are best equipped to know what’s happening around the country – whether it’s London, Bristol, Manchester or elsewhere,” he added.
London is one of the few global European cities without rent control in some form. In Paris, rent controls made a comeback in 2019 and in Berlin, backed by Angela Merkel’s government, a five-year rent freeze was also approved that year.
Among Mr Khan’s other plans for housing in London if he is re-elected is a plan to set up a City Hall-owned developer to build “genuinely affordable” housing. The Conservative candidate, Shaun Bailey, has a not dissimilar plan. He has pledged to set up Housing for London – a new advisory body funded through the Affordable Homes Programme.
As part of their coronavirus economic recovery plan Boris Johnson’s government has introduced measures which favour homeowners, investors and ultimately financial services such as new 95 per cent mortgages and a stamp duty cut. Both have inflated house prices.
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“The Government has shown time and time again that it views housing as a commodity rather than a necessity,” Mr Khan said. “Instead of obsessively focusing on policies which inflate house prices and push the dream of home ownership further out of the reach of ordinary Londoners, the Government needs to massively increase investment in council, social and other genuinely affordable homes.”
Mr Khan sees secure housing tenure and a supply of affordable housing as crucial to the economic recovery post-pandemic. He is concerned about the growing number of private renters who find themselves in arrears because coronavirus has impacted their income. The Government currently has no plan to help with this rent debt and the Labour Party have been quiet on the issue since announcing their policy suggestion – giving renters two years to pay back arrears – last May.
Mr Khan said the Government is “paralysed by cronyism and sleaze”.
“What the Government should have done – what they still can do – is amend the welfare benefits scheme to help those private tenants,” he said.
“Many private landlords need their rent because they have a mortgage to pay so the way to do this is for the Government to step in and support [renters]. Nobody wants to see renters evicted because of rent arrears. That’s why Labour lobbied for and welcomed the moratorium on evictions but, what’s it’s done, is simply kick the can down the road.”
Vicky Spratt is i‘s Housing Correspondent