Living expenses in London has reached an all-time high. People in the UK seeking to rent property in London boroughs are becoming more and more concerned with the affordability of property. Today, rents in London can cost up to one half of tenant’s total income per month. There are, however, options that could help with this problem.
Renters would benefit significantly by a renewed rent control regime. However, Boris Johnson, London’s Mayor, is offering little support with this idea. It is the Mayor’s feeling that rent control would cause the value of the property to decrease. The National Landlord’s Association [NLA] is likely to oppose a rent control regime because Government involvement would be of little use in encouraging supply during very desperate times.
Because of the increasingly high cost of living, the Housing Charity Shelter has become much more focused on offering tenants better long-term security in the hopes of encouraging a large-scale institutional investment in rental properties rather than opting for price controls.
Rent controls are already in effect at the present time. The Rent Act (1977) provides that every rent increase on certain properties be limited to the amount which is linked to the Rental Price Index. This “far rent” rule would mean that a one-bed flat in the Wimbledon Village area would cost 350 GB pounds each month, while a landlord of a similar flat in the same community could ask for 1,500 GB pounds each month. The Act protects the tenant from being evicted, as long as their rent is paid in a timely manner. If any disputes should arise, they can be settled by a London rent assessment panel.
Approximately 100,000 tenancies in the UK are protected by “fair rent” system. This rule applies in the London boroughs of Merton, Camden, Chelsea and Westminster. While the fair rent system still is not perfect, it continues to protect tenants against excessive rent increases. Many of these tenants are among the elderly. Landlords can also benefit by the fair rent system as well. Landlords can obtain 7-8% in annual rent increases if they apply for them. If the landlord can show that they have made improvements to the property, they can further raise their rents.
Another positive approach in remedying the rising cost of London rents is a maximum rent levy, much like the tax levies in New York. Due to the excessive rent costs, which are unaffordable for most people, The mayor can hold negotiations with private landlords. This would help tenants in cutting costs and would increase property accommodations.
Another effective way to control the high cost of rentals in London would be to implement a five-year tenant contract for families who have children. “Mystery Shopper” checks issued by officials would ensure that all standards to maintain homes are satisfactorily met to benefit claimants. These reforms are essential to ensure all rental accommodations are provided to the tenant at an affordable price.
While landlords may not financially benefit from the capping of London properties let to the tenants, it could very well save the tax payers million of public GB pounds as a result.
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