Semantron 23 Summer 2023

Could rent controls solve London’s cost -of-living crisis?

Hector Senior

In March 2022, Mayor Sadiq Khan called for powers to freeze private rent in the capital for two years. 1 This echoed calls made by Jeremy Corbyn during his tenure as Leader of the Opposition for similar rent regulation nationwide, such as at the Labour conference of 2017. 2 Khan’s calls came when inflation stood at 7%. That figure is at the time of writing 10.1%. 3 London is unique in the UK for its high living costs with the average rent for a one-bedroom dwelling being 45.3% of median pre-tax pay in the Greater London Area. 4 With almost a third of London residents privately renting, a total of 2.4 million people would supposedly see a halt in rent increases with the mayor claiming an average of £3,000 saved for renters over the two-year period Khan wishes to enact these freezes. 5 The rent regulations this essay shall focus on are price controls, also referred to as rent control and eviction controls. With 83% of all private renters in the UK aged 44 and under and 65% aged between 16-24, 6 this freeze would most prominently aid younger people earning lower wages. With the average income of this age category being less than £20,000 a year, this freeze would contribute a substantial saving for this younger generation, aiding prevention of further increases in what has been dubbed ‘ Generation Rent ’ . It must be considered that younger people typically rent cheaper properties than their older counterparts. However, with average rental costs in London back in 2018 being around £1600 monthly, 7 it is safe to assume that even lower priced accommodation is still much more expensive as a percentage of income than in other regions of the country. Generation Rent is an ever-growing problem as younger people are unable to purchase property with house prices in London currently costing over 11 times average earnings. This figure was four times average earnings in 1983. 8 With rent taking up more of younger earners’ disposable incomes, their ability to save and buy properties is decreased, forcing them to remain as tenants to landlords, many of whom are elderly people already with homes 1 Mayor calls for rent freeze. 02/09/22. 2 Anderson, P. Jeremy Corbyn is right: we need rent controls, and we need them now. labour 02/09/22. 3 Consumer price inflation, UK: July 2022. 02/09/22. 4 London rent as a percentage of gross pay. 02/09/22. 5 Mayor calls for rent freeze. 02/09/22. 6 Average age of renters across the UK. 02/09/22. 7 The Economics of (Housing) Rent Controls. 02/09/22. 8 Pettinger Generation rent – definition and causes. 02/09/22.


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