Sadiq Khan’s rent control policy launch hasn’t exactly been an unmitigated success, it’s already been branded “economically illiterate” by most economists while the London Chamber of Commerce and Industry has dismissed it as a “pre-election populist measure that places blame on landlords but ignores the problems of the London housing market” which will only “reduce the supply of rented housing further over time and raise housing costs in the long run”. Meanwhile Shaun Bailey is actually launching house-building policies instead of just trying to bash landlords…
Sadiq could have saved himself a lot of time and hassle if he’d just read this Treasury report from February 2010, which explains:
“A key factor behind the decline in the private rented sector was the introduction of rent controls during the First World War. Artificially low rents reduced investment in the sector, contributing to a tenure shift to owner-occupation and lower maintenance standards in the stock that remained. The low quality of stock that had resulted from rent controls also deterred many potential tenants.”
“Rent controls had a particularly negative effect impact on both supply and quality of UK rental accommodation over the period to 1988.”
“The impact of pre-1988 rent controls was that little new private rental sector stock entered the market, with long-run rates of return being depressed. What stock remained tended to be older than in other tenures, and of lower quality, as the use value of higher quality stock was considerably higher in the owner-occupied sector, resulting in tenure switch. Those who remained often lacked funds (or incentives) for the adequate repair and improvement of properties. Many consider rent control to have been a major factor to the subsequent delay of much of the inner city housing stock.”
Who was a Minister attending Cabinet in the Labour Government which produced the report? Sadiq Khan!