Rent Controls Urged To Tackle London's Housing Crisis

London, November 28, 2014 (Newswire.com) - With housing crisis in London deepening, compounded by rising rents and high prices of properties, there is a demand for rent control to douse the anxiety of Londoners. 

The latest reports say that average house prices are standing at £500,000 and private rents are double the national average. The London residents are not getting much relief from Council housing as it is getting depleted. 

To address London’s housing crisis, local authorities need to take drastic steps to deliver more new generation housing though Labour councils have started building new council homes after many decades. 

Until 1979, London councils were building one third of new homes. But Thatcher government with its interest in market forces took out councils from house building and the private sector failed to fill that house deficit. Now people are suffering with high rents and unaffordable house prices.   

Rents Hitting New Record

The latest buy-to-let index says cost of renting has risen to all-time high of £761 a month. The figures indicate a peak month for tenants to look for new homes. Many Property Services companies inform that rents rose 2.4 percent in the 12 months to August across the country edging £3 higher than the previous record of October 2013 at £758 in monthly average. 

The study announced a spurt in buy-to-let invest in the past year with rents and capital growth delivering a return of nearly 13percent in a year. These findings have triggered fresh fears that the "generation rent" will ever be able to buy affordable homes.

Sky-high rents

The average rents in London in 7 out of 10 regions of England and Wales are higher than what it was a year ago. Rent in London rose 3 percent this year to £1,160.

The sky-high rents will only make the 'rent trap' more serious for many. The combination of rising rents and increases in house prices are making buy-to-let profitable business.

Property Price in London 

In select boroughs of London property price soared one third in a single year. Though the banking crisis completed its seventh anniversary in August this year the huge credit crunch hit that followed continue to push house price drops in some areas.

Market intelligence says, asking prices for new properties on the market in the capital are down by 5.9 percent in August. New rules on mortgage lending, expectations of an interest rate rise have raised slight hopes of buyers. Rising prices in south London had properties changing hands for 40 per cent in 2013. Going back to the 2007 prices looked improbable although activity has returned. 

In some expensive parts of London prices have fallen as people realise they can get more for their money in other parts of London and beyond. Since March, prices in prime central London have declined. 

Demand High 

With mortgage rates low and falling, demand for properties will stay high. Prices are still going up but at a slower pace. With the Bank of England governor talking about interest rate rises people are wary of taking the plunge. 

Says property economist Ed Stansfield, prices are supported by growing signs of an economic recovery and unrest elsewhere in the world. Many estate agents in London say their phones start ringing with overseas investors calling up to buy as they are feeling insecure in other cities.