Shares in several of the UK's largest buy-to-let mortgage lenders declined on Tuesday following reports that Chancellor Rachel Reeves is considering a one-year rent freeze for private landlords in England. The potential measure aims to protect households from rising living costs exacerbated by the Iran conflict.
Market Reaction
When the London Stock Exchange opened on Tuesday, shares in buy-to-let lenders experienced notable drops. OSB Group, the parent company of Kent Reliance and Precise Mortgages, saw its stock fall by 3.6% to 510p. Similarly, Paragon Banking Group, another prominent FTSE 250 lender focused on professional landlords with multiple properties, saw its shares decline by 2.4% to 733p.
Government Position
The Treasury declined to comment on the speculation. However, Education Secretary Bridget Phillipson clarified on Times Radio that the rent freeze is not an active consideration. She stated, "That isn't something that we are actively considering, just to be completely clear, that is not the approach we will be taking. But the chancellor is concerned, as we all are, about the impact of the conflict in the Middle East on family finances and is looking at what more might be required to help get through this."
Context of Recent Measures
The proposed rent freeze would add to a series of restrictive measures imposed on private landlords since 2015, aimed at curbing the once-booming buy-to-let sector. On Friday, the Renters' Rights Act is set to come into effect, introducing significant changes. The new law bans no-fault evictions, limits rent increases to once per year and only to "the market rate," and prevents landlords from accepting offers above the asking price.
Industry Concerns
Timothy Douglas, head of policy and campaigns at Propertymark, which represents property agents, described the rent freeze reports as "alarming" for landlords, especially given the "huge regulatory change" already being introduced by the Renters' Rights Act. He warned, "Rent controls risk distorting the market and undermining investment at a time when demand already far outstrips supply." Douglas urged the government to focus on increasing housing supply and supporting long-term investment in the private rented sector instead.
Previous Precedent
In September 2022, then-Scottish First Minister Nicola Sturgeon introduced a rent freeze for tenants in social and privately rented homes to address the cost-of-living crisis. That freeze ended in April 2023, when increases were capped at 3% for 12 months.
