Sadiq Khan recently outlined the initial plans for his London Living Rent scheme, where households on low to middle incomes in the capital can save for a deposit by paying below-market rents.
This housing policy, will aim to help offer families and households on average incomes an alternative to privately renting.
Under the scheme, which will vary from borough to borough, households earning between £35,000 and £45,000 (who are currently privately renting) could rent a London Living Rent flat for less than £1,000 per month. In September, the average rent in Greater London was £1,555pcm, The HomeLet Rental Index shows.
Further details and information regarding the London Living Rent will be released in the coming months, but as yet it's unclear how many people will benefit from the scheme.
Could the Living Rent help plug the capital's housing shortage?
The affordable homes will all be newly-built, and will only be offered to tenants who are currently renting, so existing stock won't be affected.
As things stand, however, there is no concrete information on when the scheme will be implemented or how exactly it will work. This has led to criticism from those who sit beside Khan on the London Assembly. Tony Devenish, planning spokesman for the Conservatives, labelled the scheme 'distracting spin' and said the only way to reduce rental prices was to build many more homes.
Meanwhile, Siân Berry, the Green Party councillor who came third in the last London mayoral election, argues that something more sophisticated and wide-ranging is needed to make sure rents don't continue to rise and people don't continue to be left behind.
How could it affect landlords and agents?
For some, the proposed London Living Rent will be seen as a form of soft rent-capping; another attempt to bring regulation, red tape and state intervention into the Private Rented Sector.
Landlords and buy-to-let investors, who may already feel bruised by the increase in legislation that has been introduced in the last 18 months – including the additional 3% stamp duty surcharge on second homes, the changes to the Wear and Tear Allowance and the phasing out of mortgage interest tax relief – might see this latest move as another way of nudging them aside.
While the scheme isn't expected to directly impact existing tenancies, some landlords and letting agents in the capital may worry that such initiatives – offering below-market rent to a select group of people – will become more widespread.
Who will benefit from a Living Rent?
For tenants, the scheme might sound enticing, but it's still unclear how many London Living Rent homes will actually be built and who will be eligible. While £35,000 to £45,000 might sound like a lot, the scheme is based on average household income – so two people with a combined salary of £35,000 would be eligible. Still, this means the scheme is more likely to benefit couples rather than individual savers and may not do much to help those most in need of affordable housing.
Also, who benefits from the scheme will depend heavily on which borough they live in. While Hackney's new mayor, Phil Glanville, has already announced that the borough will be the first to build 500 homes for the London Living Rent scheme, it's unclear how many other boroughs will follow suit and how much land will be made available for Khan's scheme.
What could be the long-term impact?
Until we know more about the scheme, and the potential long term impact landlords, it is impossible to make a firm judgement. One thing is for certain, though, demand for rental homes is outstripping supply in London.
All the recent research, from RICS to PwC, suggests that the number of renters could grow exponentially in the next decade, with some estimates indicating that there will be more than 7 million private renters in the UK by 2025. London, in particular, is expected to see its population swell in the coming years, so the need for affordable houses in the capital will only grow in many areas of London there is an imbalance in the supply and demand of rental property.