"This feels like a mind-boggling scale of intervention in the private market"
- Robert Colvile - Centre for Policy Studies
The Treasury is reportedly weighing proposals to freeze private rents in England for up to one year, in what would represent a significant reversal of government policy on the private rented sector.
The Guardian broke the story, reporting that Chancellor Rachel Reeves is exploring the plans as part of a broader cost-of-living support package, prompted by fears over the economic fallout from the conflict in Iran.
Discussions remain at an early stage, according to sources cited by the newspaper, but a full 12-month rent freeze, rather than a cap tied to inflation or wage growth, is understood to be the preferred option under consideration. The Treasury declined to comment, dismissing reports as "speculation".
Under the reported proposal, landlords across England would be prohibited from raising rents for a 12-month period. Newly built properties could be exempt, an acknowledgement that current output sits roughly a third below Labour's target of 1.5 million new homes this parliament. The plan would require parliamentary approval, and no timeline has been confirmed.
The backdrop is a rapidly deteriorating economic outlook. The IMF has warned that the UK faces the steepest growth downgrade and the joint-highest inflation rate among G7 nations this year, largely due to disruption to global energy supplies, including pressure on the Strait of Hormuz.
Speaking to Sky News on Monday, Prime Minister Keir Starmer acknowledged that households may need to adjust their spending. "I can see that if there's more impact, people might change their habits," he said. "Where they go on holiday this year, what they're buying in the supermarket, that sort of thing."
Political pressure is also a factor. Labour faces anticipated losses in next month's local elections, with several urban councils expected to fall to the Green Party, which supports rent controls. Tenant groups and unions held a march in central London last weekend, calling for intervention in the private rented sector.
Industry reaction
The proposal has drawn fierce criticism from landlord groups.
"Introducing a rent freeze would be a disaster for landlord and investor confidence and consequently the supply of homes in England," said Ben Beadle, chief executive of the National Residential Landlords Association.
"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."
He added, "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."
Renters' Rights Act
The timing adds further edge to the NRLA's concern. The Renters' Rights Act comes into force this week, introducing sweeping changes to landlord and tenant law. Beadle's suggestion that the rent freeze speculation alone could push some landlords to exit the market reflects how little goodwill remains between the government and much of the landlord community.
The proposed freeze would also contradict recent statements from ministers. On 13 April, housing minister Matthew Pennycook responded to a written parliamentary question by stating the government's position plainly.
"The Government do not support the introduction of rent controls, which we believe could make life more difficult for renters," he said. "There is sufficient international evidence from countries such as Sweden and Germany, and from individual cities such as San Francisco, as well as the recent Scottish experience, to attest to the potential detrimental impacts of rent controls on tenants."
The IMF's own assessment supports that view. The fund has said there is "no clear evidence that rent controls have led to lower rents, rather they seem to be associated with lower housing supply."
However, not all observers are opposed. George Bangham, who leads social policy at the New Economics Foundation thinktank, argued that carefully implemented rent controls could address what he described as an affordability crisis in private renting that predates the pandemic.
"Other countries in western Europe already do this, and England used to from 1915 until 1989," he said. "We know rent controls can fix an affordability crisis if done carefully; we just need to be willing to impose them."
Robert Colvile, director of the Centre for Policy Studies, offered a starkly different assessment. "This feels like a mind-boggling scale of intervention in the private market," he said.
Colvile has also argued that the government's focus should be on building significantly more homes as the primary mechanism for bringing rents down.
The Spectator has pointed out a potential contradiction at the heart of the policy. The proposed freeze is partly motivated by fears that mortgage rates could rise further as inflation climbs, driven by Iran-war-induced energy costs. But if the freeze accelerates a landlord exit from the market, it could make buy-to-let mortgages appear riskier to lenders, potentially driving rates higher rather than lower.
Scotland
Scotland's experience with rent controls is likely to feature prominently in any parliamentary debate. The Scottish Government introduced emergency rent freeze legislation in 2022 during the cost-of-living crisis. Landlord groups in Scotland reported significant financial strain, and the country's private rented sector has continued to contract since.
A rent freeze in England would be unprecedented. Even during the Covid pandemic, the Johnson government stopped short of restricting rents in the private sector. Wales recently rejected a similar measure.
The government has not confirmed whether it will proceed with any intervention. For landlords and investors already navigating the most significant regulatory changes to the private rented sector in a generation, the uncertainty may prove as damaging as any final decision.
