Disaster for buy to let investors if Berlin-style rent freeze happens
New research shows that some buy to let investors in London could typically lose over £19,000 a year if Berlin-style rent freezes were imposed.
Across England and Wales the typical loss would be £5,274 per year.
Rent freezes are advocated by some Labour and Green Party politicians and by tenant groups. Now this new research by room sharing online platform ideal flatmate, shows the impact such a freeze would have if it were ever to be implemented.
The platform says that German finance minister Olaf Scholz has voiced his support for a five-year rent freeze to tackle the rising cost of living in Berlin so that the city doesn’t “end up like London”.
ideal flatmate has extrapolated recent UK rent rises into the future, to see how UK rents would increase over five years, but then it has imposed a Berlin-style cap to calculate the losses for landlords.
The implementation of a five-year rental rate freeze would see London buy to let investors lose a total of £7,620 in rent; investors in Newham would lose the most, with a five year freeze seeing a drop in rental income of £19,413.
A five-year rental rate freeze would also see a five-figure reduction in rental income in Barking and Dagenham, Hackney, Waltham Forest, Tower Hamlets, Redbridge, Kensington and Chelsea, the City of London, Havering, Lewisham, Southwark, Enfield and Ealing.
High rental growth rates in other major regional cities mean that investors elsewhere would also lose out.
Oxford landlords would lose £17,746 over the next five years; in Bristol the loss would be £14,294; and in Manchester and Newcastle there would also be five-figure losses.
Co-founder of ideal flatmate, Tom Gatzen – who interprets a theoretical freeze as a possible saving for tenants – says: “The figures suggest that should such a rental rate freeze be introduced in London and the wider country, the saving for tenants could be considerable. This saving could go some way towards a mortgage deposit and a foot on the ladder, while at the same time helping to alleviate some of the pressure on the rental sector. “
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