Landlords: How Will Sadiq Khan’s Rent Freeze Affect You?

Posted on April 5th, 2022.

Over the next 2 years, Landlords could be facing heavy bills of as much as £15,000 as there have been talks from Mayor Sadiq Khan for tighter rent controls in London.

So.. How Does This Stack Up?

This would mean, buy-to-let investors are at risk to lose thousands as the demand from the mayor to freeze the rents for two years. The rent freeze comes as a result of the current cost of living in London becoming ever so high, so the mayor has put into place rent freezes for 2 years to help with the growing costs for tenants. Over the 2 year freeze, tenants could save on average in excess of £2,000.

With the freeze, it would be damaging on landlords and could potentially make them sell up their properties and come out of the buy to let sector. This would cause more harm to the current housing crisis as by shrinking the supply would increase rent prices over time. As the energy bills, mortgage rates and EPC costs are steadily increasing for Landlords, the rent freeze couldn’t come at a worse time, and the effects of them selling up would be detrimental as there is already a shortage of supply for tenants, this would simply add to the issue.  

Bills, Bills, Bills

The Bank of England statistics show on average with the rising bank rates from December 2021, on average there will be an increased bill of £960 over the two years for landlords.

Michael Gove, levelling up secretary, wants to introduce plans of a landlord register and for the private rental market to meet the Decent Homes Standard target. A similar scheme currently being carried out in London borough of Newham estimates that that it will cost landlords an extra £750. On top of this, the Energy Performance Certificate upgrades are bringing the bill up another £10,000 as this is the cap for all upgrades to be completed per property to bring them up to a C grade minimum by 2025 for new lets and 2028 for existing lets. As you can appreciate, the bill for Landlords is knocking on the tune of in excess of £11,000.

The Housing Crisis

As the blended working model is beginning to normalise back to working from offices, there has been a mass influx back into the cities which is causing huge competition for homes and increasing rents in London. London landlords have been hit hardest with their losses in rents during the pandemic due to defaulting tenants.

As it stands, Sadiq Khan doesn’t have the sole power to impose these rent controls however he has requested the ministers to give him the power to do so. His rent freeze and request to the ministers for the power to impose them, comes from the thought that tenants living in the lesser energy efficient homes, they are already struggling and the energy crisis is taking a toll on top of the pandemic’s effect on tenants. This is not the first time Sadiq Khan has requested for the rents to be frozen for tenants.

The Scottish and Welsh Government are following in Sadiq Khan’s footsteps with the Scottish National Party looking to introduce rent controls by 2025 and the Welsh Labour Government also looking to introduce rent controls in the near future.

Ashmore Residential are your local experts, if you are having any legal or contractual disputes with your tenants or even with your current Agent, call our Lettings Helpline on 020 8366 9777 or email us your queries to [email protected] where you will receive professional, impartial advice, without obligation.