Chancellor Rachel Reeves is considering imposing a one-year rent freeze on private sector homes amid growing alarm in government about the impact of the Iran war on voters' budgets. Landlords in England would be banned from raising rents for a limited period under the proposals, which are being debated as part of a major cost of living package expected in the coming weeks.
Policy Reversal
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. However, 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.
Political Context
With Labour braced for heavy losses at the local elections, Prime Minister Keir Starmer looking vulnerable, and economists predicting a surge in inflation, ministers are seeking immediate ways to ease the cost of living for voters. The freeze is one of several policies being considered to mitigate the impact of higher inflation triggered by the Iran war and the closure of the Strait of Hormuz.
Expert Opinions
George Bangham, head of social policy at the New Economics Foundation thinktank, said: "We have an affordability crisis in the private rented sector, which dates back to before the pandemic. Other countries in western Europe already do this, and England used to from 1915 until 1989. We know rent controls can fix an affordability crisis if done carefully, we just need to be willing to impose them."
However, others warn that controls on private sector rents will discourage developers from building housing and exacerbate affordability problems in the long term. Robert Colvile, head of the Centre for Policy Studies, said: "This feels like a mind-boggling scale of intervention in the private market. If the government wants to bring rents down it should build an awful lot more houses."
Details of the Proposal
Discussions are understood to be at an early stage, although Reeves is said to be looking at a number of interventions in the rental markets. Sources say her favoured option is an outright freeze lasting one year. The chancellor is expected to exempt new-build properties from the freeze to encourage developers to continue working on new schemes. Labour has promised to oversee the building of 1.5 million homes over the course of the parliament, though current building rates are about a third below the target.
Previous Considerations
Labour commissioned a report while in opposition from Stephen Cowan, leader of Hammersmith and Fulham council, which recommended a rent cap in England and Wales ensuring rents do not rise by more than either inflation or local wages. Shadow ministers dismissed the idea at the time and did not include it in their package of reforms, which makes it illegal for a landlord to evict a tenant without a reason. The freeze now under consideration goes further, albeit for a limited period, reflecting the view that these are extraordinary circumstances.
Economic Impact
The International Monetary Fund warned this month that the UK would suffer the sharpest growth downgrade and joint highest inflation rate in the G7 this year, even if the fallout from soaring energy costs could be contained by mid-2026. Speaking to Sky News on Monday, Starmer said people might need to change their travel plans or grocery purchases depending on how long the conflict lasts. He said: "I think we'll see how long the conflict goes on. I can see that if there's more impact, people might change their habits ... Where they go on holiday this year, what they're buying in the supermarket, that sort of thing."
Additional Measures
Reeves is also considering a package of support to help with some households' energy bills later this summer and is under pressure to cancel a planned rise in fuel duty. Ministers hope that bold proposals to ease the cost of living could help shore up Starmer's position after the local elections next month, where Labour is expected to suffer heavy losses. Several councils, especially in urban areas, are expected to fall to the Green party, prompting concern among Labour MPs about losing voters to their left.
International Comparisons
The Greens have proposed rent controls in England and Wales, but while party leader Zack Polanski has called for a one-year rent freeze in Wales until those controls come in, he has said the path to rent controls in England "might be longer." Other countries have announced or imposed rent controls in recent months, including Scotland, where MSPs have passed a bill to allow ministers to cap rent in certain areas, and Spain, where the government has introduced a temporary measure allowing renters to demand a rent freeze for up to two years.
