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UK: Chancellor Rachel Reeves is considering a freeze on rents within the private sector for a limited period.
The potential move is intended as a counter to higher prices caused by the Iran war, which are putting household budgets under significant pressure.
Rachel Reeves’ decision to revisit rent rises were included in claims made by The Guardian newspaper. Its report said: “The measure would be a significant reversal from the chancellor, who has resisted including rent controls in the government’s renters’ rights reforms, which come into force on Friday. But sources informed of the government discussions say ministers are now sufficiently worried about what the conflict in Iran will mean for mortgages and household budgets that they are willing to consider exceptional measures.”
Reeves’ plans contradict the stance of housing minister Matthew Pennycook, who recently told MPs that “evidence from other countries shows rent controls detrimental to tenants”.
He said: “I have looked at a wealth of evidence, particularly international evidence, of what the impact of first and second-generation rent controls are, as well as more subtle forms of rent control, which can have differential impacts on different groups. Such controls typically benefit settled and better-off tenants more than those looking for a home or needing to move.”
Industry reaction to the report has been swift and damning.
Brendan Geraghty, CEO of the Association for Rental Living, said: “If the Chancellor is actively considering a rent freeze in England, as reported in the press, it’s not just misguided, it’s reckless. Instead of reportedly examining rent freeze measures to lessen the impact of the cost of living from Westminster, the Treasury needs to speak with the practitioners on the ground, those living and breathing the rental sector, about the impact such measures would have. Scotland tried rent control in 2022 with the Scottish government introducing emergency rent controls, freezing rents at zero per cent and later capping increases at three per cent.”
“The result was that inward investment stalled, forward-funding pipelines dried up, developers walked away, supply fell and rents, over the medium term, went higher not lower. The speculation also directly contradicts the words of the housing minister only last week on rent control, and the timing is baffling with the Renter’s Rights Act coming into force in mere days. This is a time for joined up government thinking and to stop treating housing as a political football. The ARL welcomes a conversation with the Treasury to stress how the rental sector and Build to Rent delivers not only homes but creates jobs and sustains communities. It’s time to recognise that, redefine the narrative around it and above all, revalue the rental sector and stop demonising the very people and institutions building the homes Britain desperately needs.”
Ben Beadle, chief executive of the National Residential Landlords Association, said: “Introducing a rent freeze would be a disaster for landlord and investor confidence and consequently the supply of homes in England,” he says. Any hope of growing the market– or even retaining the homes that millions of families rely on – would be lost. There is no evidence to suggest that it would make rents more affordable. In fact, the impact on supply would inevitably drive new rents still higher. Such a move would run completely counter to good economic sense and the Government’s own prior decision to rule out such measures. At a time when demand for rental housing continues to significantly outweigh supply, we agree with the Housing Minister’s view that any form of rent controls would make life more difficult for renters. Even if these reports prove to be speculation, it is reckless for this kind of uncertainty to be created in the same week that major reforms already causing concern among landlords come into force. For many, it may be enough to conclude that this is the moment to exit the private rented sector for good.”
A Downing Street spokesperson moved quickly to say that freezing private sector rents was “not the approach we will be taking” following The Guardian report. “We have no plans to implement this. Our focus remains on cutting bills and backing renters alongside lower energy prices,” they said.
But Reeves did not rule out the idea when asked about it in the Commons yesterday, telling Labour MP Yuan Yang: “I will do everything in my power and use every lever we have to bear down on the cost of living, including for people in the private rented sector.”
Highlights:
- Chancellor Rachel Reeves is considering a freeze on rents within the private sector for a limited period
- The potential move is intended as a counter to higher prices caused by the Iran war, which are putting household budgets under significant pressure
- Industry reaction to the report has been swift and damning
- A Downing Street spokesperson denied the government was intending to introduce rent freezes
- But Reeves stuck to her guns in Parliament yesterday, saying: “I will do everything in my power and use every lever we have to bear down on the cost of living, including for people in the private rented sector.”
