Berlin made the news when it announced that will stop landlords charging extortionate rents – but is the same possible here?
Living in London is hauntingly expensive – everybody knows that. One visit to Zoopla's website will instil a particular brand of existential crisis in your poor, skint, withered body that's hard to shake. "Why does it cost so much to live somewhere so small?" is the kind of question I've wrestled with internally on many occasions before silently plodding on with my really fucking expensive city life.
One city that's trying to make life more affordable for its inhabitants is Berlin. The German capital has introduced a rent cap in a bid to arrest some of the fastest rising rents in Europe. This means that landlords will be prevented from raising the rent by more than ten per cent above the local average.
"Oh", all us live-in-Londoners thought. "That sounds pretty good. Why can't the same happen here? Are we going to be ripped off forever?" We decided to talk to somebody who knows more than us about houses, an expert in his field. Jonn Elledge is a columnist for the New Statesman, the editor of City Metric and in his own words writes about "building more bloody houses".
Could London introduce a rent cap?
Jonn Elledge: It’s clearly possible – lots of cities around the world have some kind of limits on the rents landlords can charge. New York and San Francisco have had them for years; Berlin just introduced them, Paris is doing so shortly. So, yes, London could conceivably do it. But there are two barriers. One is that I’m pretty sure the mayor doesn’t actually have the powers to do this at the moment. So they’d need to go to Westminster to get them. And that’s the other barrier – I really don’t think there’s political will in Westminster to do this. A lot of MPs are landlords; and a lot of them don’t think you should interfere in the operation of a free housing market. Plus, we have a Tory majority. I think it very unlikely that a Tory-dominated Westminster would be willing to vote to give a Labour mayor the power to muck about with rents.
What are the pros and cons?
Jonn Elledge: Well the pros are pretty obvious: tenants are getting screwed, this would unscrew them. They’d have more money to spend on other things. The cons are:
a) it would make property a less attractive investment, which might affect housing supply – which isn’t great in the middle of a housing crisis. That seems to be what’s happened in San Francisco, and it’s why even left wing economists tend to be against rent controls;
b) it sort of creates insiders and outsiders in the rental market. So if you’ve got a rent controlled flat, you’re sorted. If you don’t, it’ll probably actually be harder to find accommodation. Basically it would make life easier for current renters, to the detriment of future ones. I talked about this at great length here. I still don’t know what I think.
How would it affect the city if we introduced a rent cap?
Jonn Elledge: Honestly? No idea. As explained above it could be horribly damaging, but I’m not sure.
What kind of person do you think will live in London in ten years?
Jonn Elledge: Again, impossible to know. But I do worry that we’re losing a lot of the people who made London so great – the struggling artist types, basically – because they can’t afford to pay the bloody rent any more, so will all go elsewhere. I also worry that we’ll end up like Paris, with poorer service workers – cleaners and so forth – having to travel in from a very long way out, because they can’t afford to do anything else. One of the best things about London has always been its social mix, the fact it isn’t ghettoized compared to many other major cities, and that people from different countries and classes and realms of life are all living side by side – I worry that we’re losing that, and our political leaders don’t seem to care.