Thursday, 23 October 2014

Cap private sector rents to ease housing crisis, says Ken Livingstone

Livingstone planning ‘Living rent’ for London

Labour candidate for London mayor Ken Livingstone will make plans for a ‘living rent’ the centrepiece of his housing strategy.

Speaking exclusively to Inside Housing, Mr Livingstone pledged to introduce a ‘living rent’ - similar to the London living wage - to tackle the housing crisis in the capital.

The pledge forms part of Mr Livingstone’s campaign to oust current mayor Boris Johnson in elections next May.

Under the plans landlords would be unable to raise rents above a specific threshold, allowing poorer people remain in their homes. It is not yet clear what the cap would be or how it would be calculated.

‘If you have a system where housing benefit will always meet the gap between what the landlord charges and what the tenant can afford rents will continue to rise,’ Mr Livingstone said. ‘Instead of a cap on housing benefit, we should have a cap on rents.’

Mr Livingstone revealed that housing would be central to his mayoral campaign, describing the 350,000 households on council waiting lists as ‘the biggest single problem we’ve got in London’.

‘We’re heading for a catastrophic housing problem… poorer people are being squeezed out by higher rents,’ he added.

Housing charity Shelter’s latest figures put average private rents in London for a two-bedroom property at £1,360 per month - two and a half times the cost in the rest of England.

Campbell Robb, chief executive of Shelter, said a rent cap would not solve wider housing issues: ‘The only way to bring rents down in the long term is to increase the supply of homes.’

Mr Livingstone’s living rent proposal pits him against private landlords who warn that rental caps could limit housing supply.

David Salusbury, chair of the National Landlords Association, said: ‘When rents were capped [by the Conservative government in the early 1980s], the private rented sector shrank from over half of all housing to just 8 per cent. Capping rents would only starve housing supply at a time of extremely high demand.’

Sources close to Mr Johnson said: ‘Putting a cap on rents would need primary legislation so it’s not something we’re worried about. Mr Johnson already has a London rent map [launched in January 2010] which shows what is a reasonable rent in different areas.’

Readers' comments (14)

  • Outside Housing

    Campbell Robb and David Salusbury make valid points.

    I'm sure like most of us they want effective measures to reinvigorate housing, not only in London but in the rest of the country.

    Mr Livingtone, on the other hand, wants to reinvigorate his career and will make any statement, no matter how valid, realistic, or feasible, to try and achieve that.

    Can we not have a cap on the amount of space given to his comments? It should be remembered that London isn't the UK and lots of people reading IH have little or no interest in the mayoral race.

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  • F451

    What a wonderful idea - I can't think who suggested it to him.

    The source close to Boris should note that the legislation for capping rents already exists, so it would only need Ministerial action to bring it back onto statute. (If this were not the case how would the source close to Boris explain the existance of 50,000 regulated rents currently!)

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  • F451

    ... and to David Salisbury - what, the houses would disappear, the landlords would demolish them out of spite - what absolute tosh from someone who should know better. All that would happen, in the worst case scenario, is that there would be a flood of houses for sale and potentially transfers of tenure - it would not reduce supply.

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  • Whilst it is true that previous attempts at rent control have led to adverse consequences it is equally true that a continuous upward spiral of rents when incomes are not rising is not a sustainable postion.

    Sustainable development must include social and financial dimensions ensuirng that the development meets actual needs and and is accessible to people to meet their needs.

    A rent cap may be a crude tool but without regulation it is possible to foresee a boom and bust situation, where supply rapidly expands on the back of rent inflation but a change in the wider economy, increasing confidence and or mortgage avalaibility makes buying more accessible. The rental market then collapses, small investors lose money and house prices fall first making homes more affordable but then reducing confidence.

    Managing the market is a valid way to avoid a collapse.

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  • We have to find a way of managing rent levels because the market is failing entirely. Rents are taking a larger and larger share of people's incomes and given the rapid rises in fuel and food prices people on lower incomes are finding it impossible to cope. Government sees it as its responsibility to tell the energy companies what to do about their prices, and even reduced tax to keep fuel costs down, so why not houisng, which is an even bigger share of ordinary people's expenditure? Of course it's complicated and keeping supply going is vital, but well done Ken for raising the issue and arguing for the interests of ordinary people. Johnson is the high rent mayor and we desperately need Ken back to build some affordable homes.

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  • Welcome back Ken, common sense at last - I suggest you start choosing your wallpaper for Boris's office!

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  • The facts speak for themselves:
    Gross weekly pay for someone on minimum wage= £211.75
    Private weekly rent on one bed flat in typical inner London area =£250 and upwards

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  • Alpha One

    F451, maybe the homes will still exist, but they won't be useable.

    If landlords stop renting and try to sell it will create a glut of properties on the market depressing prices. This will mean properties will be harder to sell and will be cheaper.

    Which all sounds good.

    But when you consider that lenders are still lending very frugally, the chances of these properties being bought are much lower.

    During this period of sale the properties won't be rented out by those landlords (harder to sell with sitting tenants) and so all that is happening is you are creating a glut of properties on an already struggling housing market (ok so London isn't struggling, but if you add a couple of thousand properties to the market it will start to suppress sales).

    For what its worth I agree rent caps are a good idea, the danger is Red Ken will see it as his crusade to 'bash the rich' and rents will be set so low that it won't be worth landlords running the business.

    Rent caps can work well, look at Rent Control in New York. But it has to be done right and I am not convinced Red Ken is the man for the job.

    I'm even less convinced Red Ken will beat Boris, for all his failings Boris is well liked.

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  • F451

    Alpha - think outside of the box - the properties do not need to be bought by people, they can be rented, and as the values will be less they can be rented affordably.

    Perhaps the massive saving in housing benefit could offset the cost of buying these 'abandoned' former private gold mines and renting them out socially.

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  • Jono

    And elsewhere, pigs were seen removing aged satellites falling from orbit. The likelihood of this proposal being successful is just as high.

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