I never thought I'd say this but...Ken Livingstone for PM!

[breadandbutterfly]

I've never liked Ken much on a personal level, BUT Ken will win the London election by a landslide, thanks to this policy:

www.guardian.co.uk/politics/2011/dec/13/ken-livingstone-tackle-london-rent

At last, at bloody last - a politician who recognises the massive importance to an increasing number of voters of affordable, reasonable quality housing for those forced to rent currently at the mercy of greedy landlords and unscrupulous lettings agencies.

How long till the rest of his party, let alone the others, catch up??

The Economist thinks house prices are still overvalued and have further to fall.

And here's one economist who thinks house prices should fall.

I doubt very much any links will stop us squabbling.

in the longer term reduced prices (rental and purchasing) reduce the building on new housing and quality of housing.
Rent control also reduces the one benefit of renting, flexibility to move to find work, love, schools etc.
people stay in the same accomadation all their lives, rather than moving to more suitable homes.
This is the same position with many councils, who have couples whose children have moved out in family homes and insufficient family homes to put those children (and their families) in.

But how do you explain that we currently have sky high prices AND the lowest building starts since ... ever.

Clearly high prices does not = high building starts. In fact, higher prices seem to have encouraged developers to hoard land in the hope of higher prices yet.

In reality, greater house building results from deliberate govt policy eg on council house building and planning reforms rather than house prices (high or low).

Re the reduction in flexibility, I think swapping flexibility for security was a price worth paying.

Sorry, you cannot look at today in the UK and ignore the evidence from around the world linked earlier
I agree there are other issues such as planning system that causes issues, but if you are supporting a policy (rent control) then you need to look at that isolation and it does not work.
Housing benefit, for example, being set at average for an area supports higher prices for all, and this is being addressed.
London is popular and does not have spare land to build, popularity makes it expensive, so policies to make London less successful compared to the rest of the country would reduce problem
Flexibility is important. If you could rent a 3 bed house cheaper than a 1 bed (because you have lived there for 15 years) would you move? So where do the new families live?
need to look at these things over 20-50 years, not 2-3 years

I will vote for him if he puts this policy through. I don't like his politics at all but he is the only politician to address the problem of unaffordable and unsuitable housing in London and the ridiculous prices charged for small, substandard property in the private rented sector.

I think it is funny that Boris has said that a rent cap would mean less homes available because landlords would pull out. Surely if landlords cannot rent their properties at outrageous prices anymore, they would either have to sell them (meaning a possible "flooding of the market" ergo more affordable properties for first time buyers to purchase, or they would sit empty, not earning anything. Sounds like hot air from Boris and the vested interests of landlords and their ilk.

At the moment we have a system where there is very little security of tenure for those renting in the private rented sector. A landlord can "evict" you with 2 months notice, even if you haven't done anything wrong, simply because they want to sell their property. Renters are just seen as cash cows with no care or concern for them or their families. They can also evict you for asking them to make repairs, again, all they need to do is issue a S21 (2 month eviction notice).

A lot of landlords do not allow you to decorate or even put nails in the wall but complain if you ask them to make repairs. Compare this to Germany where renting is the norm because tenants have a lot of rights and protection and renting really does having your own home and ability to decorate with security of tenure which is generally long and well protected with lower rents. Compare that with London where we have high rents, poor quality accommodation and virtually no tenure protection for the tenant who has few rights.

As for rent caps not working, if rent caps can function in New York - the most important city on earth, then they can damn well function here. It is simply that the vested interests - landlords, estate agents, politicians with a second income as landlords do not want to lose their cash cows.

I'd vote for Ken. He's charismatic and has always been a feminist. Ken for King!

Rent stabilisation and control in NYC applies to specific apartments built during specific periods and is nothing like what Ken is suggesting for London

The rental market in Germany is also different to ours in that a greater percentage of housing stock is owned by public sector, the state and large companies; far fewer private landlords.

madhatter80, you may find Boris's comments about landlords pulling out and the impact on the wider housing market hilarious but history appears to suggest this is accurate. This is why there has been a global move away from rent controls over the past 20 years.

Disputandum, if landlords "pull out" what are they going to do with their properties? Lots of people invested in BTL properties over the past decade and will not be able to afford to leave their properties empty. They will either have to accept lower rents or sell, meaning more properties come onto the market for people to buy.

The situation has changed hugely since 1980s when rent caps were largely removed and the whole demographics and tenure of housing in London was completely different. Now, something like a quarter of all Londoners live in the private rented sector and very little has been done to regulate this sector in over a decade. Imo, even if they don't introduce rent caps, something will give in the next few years as politically this is becoming more and more urgent and as renters become a bigger part of the voting masses, politicians will be eager to get their vote. I think it is good that Livingstone has been the first one to really raise this issue and hopefully other politicians will start to realise that it is within their interests to tackle this issue too.

I personally would prefer there to be a lot more taxation and regulation of landlords so that it doesn't pay to own loads of properties and having some wage slave pay for their retirement. That way there would be a lot more properties on the market for first time buyers. A property should be a home, not an investment for some greedy landlord!

I wish people would read the research rather than jump on bandwagons. I do not think things are perfect, but look at the unintended consequences. Various options have been tried all over the world, with a number of winners and losers. Overall and overtime, rent control penalises poor renters, not landlords and not the rich.
Therefore it is not the solution.

Oh for goodness sake, this is the link to NY Times that I should've included in my last post.

Sigh. youngermother - please just read my posts. I have replied to your points numerous times. As 'tenants' are not an inherently separate group, one can not judge the effects of rent controls on such a group but only on the wider housing market. All those lucky tenants whose landlords can no longer afford to rip them off can buy their homes instead.

So yes, there is less overpriced rental property available. But that's because there are now lots more nice cheap properties to buy instead. So less potential tenants.

Only alandlord, someone working for or paid by landlords, or a fool could argue otherwise.

This article from the Ludwig von Mises Institute touches on the unintended consequences of rent controls, and the Wall Street Journal article to which it refers is also worth a read; in particular the story of the NY congressman who rents four rent stabilised apartments at below market value, living in three and using one as an office.

" The typical rent control proposal is based on the assumption that the same amount of economic activity will take place but with a different distributional outcome. That is, the same number of apartments will be provided, and they will be provided to the same people and in the same quality."

"The reality of rent control is far different from what its advocates envision"

" Which is worse, rent control or bombs? On the Mises Institute's website, Pace University economist Joseph Salerno has a video lecture on prices, in which he offers a compelling visual exercise. He shows his audience pictures of destroyed urban areas and asks whether these are areas that have been subject to rent control or whether these are areas that have been bombed. It isn't easy to tell, but the lack of difference suggests a tragic but predictable irony. When a city is bombed, it is destroyed by people with evil intentions. When a city is subjected to rent control, it is destroyed by people with good intentions."

breadandbutterfly - I have read your posts, you do not seem to be reading mine or the links - 2 things:

1. with rent control, the amount of new building and renovation reduces, losing property to buyers and tenants
2. If a property is rent controlled, the landlord can only sell it with a sitting tenant. That is why places like Germany have such a low ownership rate.

IE the price is only lower with a sitting tenant, so not available to buy. Why would I buy if i can rent at undervalue? The purchase price when a sitting tenant dies/leaves is based on current market rates, so no lower than today.

Just read the article posted by Disputandum, thanks for posting. There are several points which I wanted to make. Firstly, the article is about rent controls in New York City and says that 70% of the housing stock is still controlled by rent caps of one type or another.

Some of the points that are raised don't seem to apply to the London market at all, whereas some of the negative points about rent caps already apply to the uncapped London market as it is now i.e. "Rent control also destroys landlords' incentives to maintain the housing stock."

In my experience renting in London, many landlords have no incentive to maintain their properties because they know that there will be someone willing to pay more for substandard housing because people need to rent and that they can evict tenants with 2 months notice if they complain about substandard housing. In fact, this applies to us. We rent a property in North London which has lots of problems, most noticeably that some of the windows are sealed shut which is dangerous and most of the doors do not close properly. We told our landlady about this and she refused to do anything, saying that if we didn't want to live here we could leave and someone else would move in, regardless of whether she fixed the issues or not. It is a myth that landlords in London are so concerned about keeping their properties well maintained as at the moment they know that people have to live somewhere and will be prepared to pay over the odds for substandard accommodation rather than be homeless. It is all in their favour and they can hold tenants to ransom. There is very little real regulation and minimum tenure is 6 months at the most, so no security.

Also, if rent controls were brought in here in London, they wouldn't necessarily function in the way the article suggests, as there are different rules and regulations dictating conversion of residential properties into commericial units etc and different taxes that are paid on commercial units as well as building regulations etc. If rent caps are introduced, there would be other satellite laws and rules brought in to alleviate some of the problems that rent caps caused, I doubt they would be applied in the same way as NYC or as in London in the 80s since London in 2011 has unique requirements for unique demographics and housing.

What I would like to know is what do you and Youngmum1 suggest as an alternative? If we continue with the status quo we have more people forced to rent at extortionate prices, affecting not just their quality of life but also the economy. If people are spending all their money on rent then they do not spend in the wider economy and it is all going into landlords' pockets. Landlords still have no incentive to ensure their properties are up to standard since they can always get someone else to pay higher rent if the current tenants complain, so often tenants keep quiet, living in dangerous and unhealthy accommodation. Secure of tenure is a joke. If landlords cannot rent at their required rate, then they would have to sell up if they are BTL landlords and capped rent does not cover their mortgages, meaning more properties on the market to buy at lower prices for those currently priced out by BTLers.

I would like to hear your suggestions of what you think should be done and I also would like to know if either of you have a vested interest in keeping the status quo, i.e. are either of you landlords, estate/letting agents or benefit in any way from renting out properties? Thank you.

Madhatter80 -

To answer your questions :

You will notice that in an earlier post I said that rent control in NYC was different to what Ken appears to be proposing for London.

This comment, and the Ludwig von Mises Institute article, were in response to those people on this thread, including you, who suggested that rent controls work effectively in NYC.

My interpretation of the article is that it talks about the shortfalls of rent control in general terms but does use NYC examples to illustrate.

There are other links on this thread that point to the negative impact of rent control, and precious little research or evidence to be found anywhere suggesting that it works as its advocates intend.

I have posted my suggestions earlier on in the thread.

I am not a landlord or letting agent, but have been a tenant in the past.

I am sorry that your landlady is not sorting out your windows and doors, but doubt that she would be any more inclined to fix them if the rent she could charge you was capped or otherwise controlled. Indeed the evidence suggests that she would be a good deal less likely to carry out repairs.

The things that would improve your situation are : robust accreditation schemes, penalties for unscrupulous landlords, and more choice so you could tell her to get lost.

Thanks for your reply Disputandum.

You said; "I am sorry that your landlady is not sorting out your windows and doors, but doubt that she would be any more inclined to fix them if the rent she could charge you was capped or otherwise controlled. Indeed the evidence suggests that she would be a good deal less likely to carry out repairs."

Since she is not inclined to fix the issues when the rent is not capped and will likely go up next year, I would rather her not fix the problems and have her not able to charge more, than her not fix the problems and her able to charge more every year.

You said; "The things that would improve your situation are : robust accreditation schemes, penalties for unscrupulous landlords, and more choice so you could tell her to get lost."

I agree. If renting is going to be the future for London, then it needs to move towards the European model where tenants have far more security of tenure, more rights and bad landlords cannot get away with bad housing and threats of eviction for complaints. At the moment the problem is that we will have a rental culture with all the advantages in favour of landlords. The reason why Germany has such a big rental culture is because there is so much protection for tenants and renting is not seen as a business with tenants as cash cows, as it is here in London. If Livingstone achieves anything for renters through this policy it will be to highlight the raw deal renters get at the moment and hopefully this will be the first step in the right direction for politicians to make renting a much more pleasant experience.

I found this comparison between the German and UK rental market interesting.

It seems that there are a number of reasons why people are more likely to rent than buy - a tax regime that does not favour home ownership, stringent mortgage regulations, expensive mortgages, house prices that rise modestly (eliminating the urgent need to get on the housing ladder) and a generous supply of quality rental properties (rental stock represents 90% of residential market in Berlin).

But yes it seems that rents cannot increase by more than 20% over three years, properties have to be decorated between tenants and unlimited contracts are the norm (although landlords require three months deposit, and agencies take a two month fee, how does this compare to UK, I can't remember...).

I am not a landlord either, have been a tenant, now own own home (with a mortgage :) )
I fully understand the frustration with high rents in London and bad landlords, but as all the research shows - see also here www.bloomberg.com/news/2011-02-03/portugal-crumbles-as-century-old-rent-controls-choke-property-investment.html, rent control is not the right answer. There is no research i can find that suggests it works
Also the UK is amongst the most densely populated countries in Europe and London more densely populated than other areas. This will make land cost and therefore housing more expensive.
I believe that London has a lower housing density (less apartments, more houses with gardens) than most European cities, so will also cost more.
The answer IMO is twofold:

1. Cut housing benefit from average rent. This will prevent the state supporting increasing rents, thus reducing rents for all
2. As people are priced out of London to elsewhere in the country, employers will be forced to pay more or relocate. This will spread the jobs better over the country. This can be led by less London-centric behaviour by the government and the media and better transport links from the regions. It is actually quicker to fly to the US from Birmingham or Manchester than London, so encourage better facilities in these airports rather than Heathrow.

was hoping for a thread about this. It sounds a good idea - I rent privately following divorce and rent is extortionate evem at the lower end of the market - #1400 for a small three bed (I do live in London but that's where my job and dcs schools are) - we have to leave our house in July and I am spending many sleepless nights worrying about where we will live.

I am a good tenant - have paid rent consistently and on time for over five years but don't have brilliant credit record so suspect that agents won't be interested.

The council are not interested as I would have to be homeless in order for them to help.

So I just have to hope for a sympathetic private landlord who will rent us a property. I also want long term rental as I can't afford to move home every six months.

I do have a reasonably well paid full time permanent job so am hoping that will go in my favour.

Once we know where ds2 has been allocated a secondary school in March I can decide whether to stay in this area or move to an area closer to his allocated school. It needs to be within commuting distance of ds1 school.

Or there is the chance that he will be allocated no school or an unsuitable school and don't know what we will do then.

Its a nightmare tbh. Ken's idea sounds brilliant.

It's all very well to say move to an area with cheaper rents but then what you don't pay in rent you pay in cost of travel.

For example where my parents (a one hour fifteen minute commute to a mainline station) live the season ticket is 5k. I don't want a long commute as being a single parent i need to be near to home for work/life balance.

I also have friends and a support network in this area so again reluctant to move to a cheaper rental area where I know no-one and dcs also will not know anyone.

My neighbours are two couples with two dcs between them who share a tiny 3 bed presumably so they can afford the rent.