Vouch: Is rent control around the corner for London - and the rest of England?

23 August 2021

Estate and letting agents and their landlords need to know that the question of rent control is back on the agenda for London - with a template that could be expanded to the rest of England and Wales.

The topic of rent control crops up time and again when low housing stock paired with strong tenant demand pushes up rent prices, so it's no surprise that rumblings about it being reintroduced in London are getting louder.

Tenants across England and the UK are showing strong motivation to move as they re-evaluate their priorities for living standards and their companies start to set out their long-term remote or hybrid working plans. Rents are soaring - everywhere in England, not just in the capital - as demand outstrips the supply of private rented properties on the market. Low average void periods show that tenants are willing to pay the higher rental values to get what they want, but these are the circumstances that are making rent control rear its head once again.

A brief history of rent control in England and Wales

Rent control applied in England and Wales as recently as 1989. It was set up during the First World War as a temporary measure to limit how much landlords could increase their prices to take advantage of the low housing supply which was pushing up demand.

The controls came to an end after a period which saw private rented stock drop from nine-tenths of the housing stock in 1915 to one-tenth by 1991. Fingers were pointed at rent control - the restrictions in place to support tenants arguably seemed to restrict investor enthusiasm for the sector too, by limiting yields making it a less attractive proposition.

A mayoral rent control debate

The merits and feasibility of rent control has been a strong factor in the policies put forward concurrently in mayoral elections for two cities recently: Anne Hidalgo in Paris and Sadiq Khan in London, with Paris slightly ahead of the game.

A rent control initiative was introduced in Paris in 2015, and overturned in 2017. Now, it's back again - in Lille too - where landlords are unable to charge over 20% of pre-established median rates in the area. Other local councils in France will join them soon in introducing similar measures in their regions, with the experiment expected to run until at least 2023.

In London, Sadiq Khan has called for the power from the central government to cap rents in London, which Generation Rent and Labour have thrown their support behind. However, these proposals require national, rather than regional, legislation which would take time to implement.

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Alternative solutions to rent control

Is there therefore an alternative solution? The World Economic Forum suggests "tax credit programmes for developers" aiming to encourage investments while preventing a drop in the affordability of properties. Timothy Douglas, Policy and Campaigns Manager at Propertymark, proposes boosting the stock of affordable homes, to balance demand with supply. "A greater focus on speeding up planning within Councils and building on land under the Mayor’s responsibility will ultimately allow more properties to be built and help make renting in London more affordable," he says.

The government's 2019 briefing paper, "Private rented housing: the rent control debate", highlights calls that have been made to introduce "longer, more secure tenancies" and to "focus on predictable rent increases, as opposed to formal systems of rent control."

Although Khan's remit is currently limited to Greater London and he would have to jump through the relevant legislative hoops to advance his agenda, he suggests that his proposals "could be a good template for how to do things across the rest of the country”. Estate and letting agents will need to keep a close eye on things progress in case these measures do take hold - and expand across the country.

Goodlord and Vouch are part of the Goodlord Group. Goodlord also offers a referencing service to complement its pre-tenancy lettings software for agents. Learn more

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