The Mayor of London, Sadiq Khan, is reported to be considering bringing in rent controls.
It is not clear that he has power to do that, or how it would work. Rent control might improve the lot of suffering existing tenants, at least for a while. But the lesson from cities like Berlin, where such controls exist, is that it would do so at the expense of the less well-connected and the less well-off who won’t necessarily look like a reliable tenant when 20 people are fighting for a new flat.
Controls also do nothing to address the underlying shortage of homes. Done badly, they can even discourage investment in new and existing housing.
More fundamentally, how did we let things deteriorate to the level where just holding rents steady is the best that tenants could hope for?
The Mayor of London has plenty of power to push rents down, if he wants to. What’s more, he can do that while generating a fairer, more walkable and prettier city, and making many existing homeowners better off.
Plenty of other cities around the world have seen rents fall as low interest rates have meant cheap money to fund housebuilding. Tokyo has partly built its way out of a housing shortage. There is no reason why we couldn’t do the same – except a failure to adopt popular reforms.
London has plenty of room for more homes. Most of the capital has one-fifth as much housing as the most beautiful parts of the centre – the parts that tourists flock to see. Swathes of London are covered with low-rise two-storey semi-detached houses. They were fine for the working class families who bought them in the 1930s.
But our current system has made them scarce and unaffordable. The planning system introduced in 1947 was never intended to encourage attractive piecemeal densification. In 1947, no one foresaw the need.
London has never got back to the net rate at which it built homes before the Second World War. With modern methods, we could build far faster than back then.