Mayor of London Sadiq Khan plans to build 6,000 rent-controlled homes in the capital by 2030.
Rents will be based on 40% of key workers’ average household incomes, with rent rises being potentially linked to wage growth.
Khan estimated that the plan would save key workers up to £600 a month.
Joseph Lane, the founder and director of brokerage Mortgage Lane, said: “The introduction of 6,000 rent-controlled homes in London could present both challenges and opportunities for buy-to-let landlords within the English capital.
“The influx of affordable housing might put downward pressure on rental prices in affected areas, potentially reducing yields for landlords whose properties compete directly with these controlled rentals.
“There could also be an upside in peripheral areas not covered by rent controls, where demand might increase as renters look for alternative options.”
The properties will be formally known as Key Worker Living Rent homes, while the Mayor will work with partners to build these homes.
As it stands a quarter (24%) of private renting households in London spend over half of their gross household income on housing costs.
Khan has launched a consultation on the proposals, and will look to receive feedback from developers and providers of affordable and market housing, as well as key workers and their organisations and employers.
He said: “I am determined to do everything in my power to make housing more affordable for Londoners. The housing crisis in our capital doesn’t just affect those on the lowest incomes, it impacts those on ordinary incomes who struggle to meet high housing costs in London.
“That includes the everyday heroes who are the backbone of our city – our nurses, teachers, bus drivers, shop workers, and cleaners. To deliver on my manifesto commitment, we want to introduce new rent-controlled homes for Londoners, which could save key workers up to £600 per month on their rent.
“I welcome views from all Londoners on how we can make this new type of housing a success, for the thousands who need and deserve a more affordable home, as we build a fairer London for everyone.”
