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London Mayor Calls for Rent Freeze in the Capital

Rent Guarantor Sep 29, 2020

As the country-wide eviction ban is now at an end and the UK's letting market continues getting 'back to normal', London's mayor Sadiq Khan is calling for a rent freeze to support tenants who continue to struggle amid the coronavirus pandemic. Residential rent levels in the capital have proved a popular topic for the mayor during his tenure, including his interest in rent controls across the city. However, while the idea of a rent freeze might appeal to some tenants, it could work to discourage Buy-to-Let (BTL) landlords and property investors from expanding their portfolios or even  retaining their existing properties in the capital. 

 Indeed, according to some, a rent freeze is simply a form of rent control and will result in a similar outcome; fewer new property investors and sharply higher rents once the freeze is over. Khan's call follows news of a five-year rent freeze in the German city of Berlin, which began at the beginning of 2020 following years of sharp increases, which Khan used this as an example of how cities can support their tenants during difficult times.

Easing the burden on renters

London’s Mayor has written a letter to the UK’s Secretary of State for Housing and Communities Robert Jenrick, requesting emergency powers be handed to him allowing him to freeze rents across London for two years. The request comes as Khan searches for a way to support Londoners during the ongoing coronavirus pandemic.

The call comes as recent research from the GLA and YouGov suggest that over 500,000 tenants in the private sector across London have either fallen behind on rent payments or expect they will at some point during the pandemic. 

“More than ever, COVID-19 means that many of London’s private renters are facing a really uncertain future,” Khan said. “This uncertainty is causing unnecessary anxiety and stress. I’m today 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 2.2 million 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,” he added.

Rent freeze akin to rent control

While there will likely be some support for such strong emergency measures to help those renting in some of the most expensive parts of the country, it has been noted that a rent freeze is simply another type of rent control which, if enacted, could alienate many private rental sector (PRS) landlords from the city. That could result in a shortage of rental homes and push rents higher, which is the opposite of what Khan is aiming for.

According to Mary-Anne Bowring, group managing director at property management firm Ringley, rather than requesting emergency powers to effectively install rent controls in the capital, the Mayor should discuss different options to support London’s renters with the government.

“If the government was serious about avoiding carnage in the private rented sector it would consider extending the furlough scheme and increasing benefit payments,” Bowring said.

However, after having recently changed the law to increase the notice period to six months, it’s unlikely those emergency powers will be granted. While the government has taken steps to support the growing number of tenants across the UK, it must also consider landlords’ position and also provide support for them.

With a second wave of Covid-19 now on the way, there’s no way of knowing just how many tenants will struggle with future rent payments. However, if the government can find a way to balance its measures to support both renters and landlords then both groups could find themselves in a reasonable position going into the New Year.

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