Rent control would worsen London’s housing crisis while hurting the poor, immigrants, and minorities. Yet Sadiq Khan wants to make it the central plank of his bid to win re-election as London Mayor. Khan has said the case for rent control is ‘overwhelming’ and that ‘Londoners overwhelmingly want it to happen’. But while some may see rent control as a way of capping the money going into the pockets of landlords, it would actually make London’s problems worse. Rent control would lead to less home building—what London actually needs. On top of that it will mean lower quality housing and discrimination against the most vulnerable.
From San Francisco to Stockholm, Berlin and New York, rent control has proven disastrous in every place it has been tried. Let’s take a look at Sweden: in 2018, the wait time for a rent-controlled Stockholm apartment was up to 35 years, with an average wait of ten years. Strong demand, the long wait and inaccessibility has led to bribes, patronage, a black market, and poorly maintained apartments. This system benefits the best connected, the socially powerful. ‘It is almost impossible for immigrants and new arrivals to penetrate this market – it is all about who you know and how much money you have,’ explains Billy McCormac, the head of a Swedish property association.
The failure of rent control is why even left wing economists have expressed opposition. After seeing the consequences in his own homeland, Swedish economist and socialist Assar Lindbeck said that: ‘In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.’ The University of Chicago’s economics experts panel agreed: an astonishing 94 per cent of economists think rent control is a bad idea.
In a free market, the individual who is willing to pay the most rents a property.