The Chancellor’s reported plan to impose a one-year rent freeze on the private sector has been dubbed “unprecedented intervention” by the industry.
First reported by The Guardian, the one-year freeze is intended to help households deal with the impact of costs resulting from the conflict in Iran.
If imposed, this would coincide with the introduction of the Renters’ Rights Act on Friday, which already restricts how private landlords can set rents. The law limits rent increases to once per year, with the requirement to give tenants two months’ notice and set the rent to market rates.
The reported measures would also contradict recent comments made by housing minister Matthew Pennycook, who in March said the government was clear that it did “not support the introduction of rent controls, including rent stabilisation measures”.
In response to a question from Liberal Democrat MP Zoe Franklin, who asked what mechanisms the government would use to stabilise rents and make them affordable, Pennycook added: “We believe they could make life more difficult for private renters, both in terms of incentivising landlords to increase rents routinely up to a cap where they might otherwise not have done, and in pushing many landlords out of the market, thereby making it even harder for renters to find a home they can afford.”
The big BTL planner: Key dates landlords need to know
Sponsored by BM Solutions
A ‘disaster’ for landlords
Ben Beadle, chief executive of the National Residential Landlords Association (NRLA), said introducing a rent freeze would be a “disaster for landlord and investor confidence and consequently the supply of homes in England”.
He said: “Any hope of growing the market – or even retaining the homes that millions of families rely on – would be lost.”
Beadle said there was no evidence that this would make rents more affordable, adding that the “impact on supply would inevitably drive new rents still higher”.
Beadle added: “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.”
He said even if the reports were speculation, it was “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,” Beadle said.
Clashing with landlord plans
Pegasus Insight said a rent freeze would be against landlord plans to raise rents within the next year.
Its Q1 report found that 61% of landlords intended to increase rents, and three-quarters said this was a direct result of the Renters’ Rights Act.
Mark Long, founder and managing director of Pegasus Insight, said: “A rent freeze would represent unprecedented intervention in the private sector, thwart the business plans of the majority of landlords and potentially force some out of business.”
Long said landlords were not setting rents in a vacuum and were already factoring in the impact of the Renters’ Rights Act and higher costs, which were “feeding directly into pricing decisions”.
He added: “Introducing a rent freeze into that environment could be the straw that breaks the camel’s back for those already struggling to balance the books.”
Timothy Douglas, head of policy and campaigns at Propertymark, said combined with the Renters’ Rights Act, which already meant less flexibility and higher costs for landlords and tenants, “it is alarming to hear reports that the Chancellor is considering additional rent control measures – particularly when housing ministers have recently publicly denounced their role”.
Douglas said: “Evidence from across the UK, particularly in Scotland, shows rent controls restrict supply, deter investment, and reduce choice for tenants. Singling out landlords to solve the cost of living is not the answer.
“Rent controls risk distorting the market and undermining investment at a time when demand already far outstrips supply.”
He said if the government was serious about improving affordability, it would focus on increasing housing supply and supporting long-term investment in the private rented sector, not measures that make it harder for renters to find a home.