From City AM:
To combat the problem of housing affordability, the mayor will advocate creating a private rental commission to implement and oversee rent controls and to establish a register of landlords to "name and shame rogue landlords".
However, free market think tanks and London's house builders have thoroughly rubbished the idea, with many arguing that increasing housing supply is the only way to deal with unaffordable rents.
Rico Wojtulewicz, head of housing at the National Federation of Builders's House Building Association, said a cap on rents could hurt the construction industry.
Clearly nonsense.
Let's say Khan caps London rents at half current levels, so rents in London are now the same as in and around (say) Leeds. Is there new construction happening in and around Leeds?
Yes. There is still a profit to be made at Leeds rent levels, and land with planning in
Leeds still has value. So there will still be profits to made by building in London.
Rent caps would only reduce new construction if the cap was so low as to make construction unprofitable, even if land with planning were free.
"[House builders] with projects in the pipeline could suffer, as rent caps may push down land prices, leaving many who have already purchased land, with unviable projects," he said.
Tough, what they paid for land, or what it was worth before the cap is irrelevant to future decision making, it is a sunk cost. They would only slam on the brakes if they had a reasonable expectation that the caps would be scrapped (and in the UK, that is a reasonable expectation).
And as he says himself, land prices would fall, which would encourage construction.
Dr Kristian Niemietz, head of political economy at the Institute of Economic Affairs, labelled Khan's stance "Trump-style knee-jerk populism".
"Rent controls have never worked anywhere," he said, "If Sadiq Khan had any interest in solving London's housing crisis, he would focus on the supply side."
He's a floppy haired Faux Lib who is too stupid to accept that agglomeration benefits will cancel out added supply. In the absence of a total ban on people moving to London, we'll have X more homes and X more households and they cancel out. London just gets a bit bigger (and more expensive), as it has been doing for centuries.
And rent controls clearly do work - see below.
Chris Norris, director of policy at the National Landlords Association, said implementing rent controls would crimp investment within the housing sector.
"Rent controls cap the price a landlord can charge, but not the costs they will incur meaning that as the cost of providing homes increases so will the losses landlords are expected to make," he said, "Landlords will have no choice but to take their investment elsewhere, making it harder still for households to access the housing they need."
Clearly nonsense.
The only significant cost that landlords have is mortgage interest, and that's only some of them. They did leveraged speculation and lost the gamble. That's life. All other landlords will still be earning money, just less than before - or else there would be no landlords in Leeds.
Whether or not Khan realises this, the effect of rent controls (in the UK at least) is that landlords sell up to first time buyers-cum-former tenants, or people buying new homes to live in, not to rent out. That makes it *easier* for households to access the housing they need, i.e. homes to own.
Rent caps are a crude form of land redistribution, but clearly it worked in the UK for most of the 20th century when such controls were in place. The result was a huge rise in owner-occupation levels and we were all happier for it.
