The Institute for Public Policy Research (IPPR), a thinktank closely aligned with the Labour government, is urging ministers to introduce private sector rent controls in England. This comes as Chancellor Rachel Reeves weighs measures to address a surge in living costs exacerbated by the Iran war.
Proposed 'Double Lock' Rent Cap
The IPPR has published a paper advocating for a rent 'double lock,' which would tie rent increases to either wages or inflation, whichever is lower. While rent controls have been proposed by left-leaning groups before, the IPPR's strong ties to the government increase pressure on ministers to include this in a cost-of-living package expected later in May.
The Guardian previously revealed that Reeves had considered a one-year rent freeze to combat rising inflation, but Downing Street quickly dismissed the idea. Maya Singer Hobbs, author of the IPPR paper, stated, 'There are millions of people living with unaffordable housing costs, and if you want to bring those down quickly there are not many options. You could spend a lot more money on housing benefit, but that is expensive. You could invest in new supply, but that takes a long time to feed through into costs. That’s why we are calling for a rent cap, albeit carefully tailored.'
Impact of Iran War on Inflation
With the war in Iran entering its 11th week and the Strait of Hormuz still closed, Reeves is examining ways to manage an expected inflation spike, which is predicted to be among the highest in the G7 this year. The chancellor is set to deliver a speech later this month outlining her plans, likely including energy bill support, but government sources indicate she is exploring various measures to reduce consumer prices.
Until recently, a one-year freeze on private sector rents was under consideration, though the government had previously dismissed it as part of its renters' rights package due to concerns it would slow housebuilding. Downing Street ruled out the freeze after the Guardian reported on it, but Reeves is still seeking other ways to keep housing costs low.
Unaffordable Rents Statistics
The IPPR calculates that 2.4 million people in the UK now face unaffordable rents, defined as exceeding 30% of gross income. This number is expected to rise by another 340,000 by the end of the decade. Under the proposed plan, private sector rents would be capped at the lower of the 12-month average of consumer price inflation or wage growth, applying to both new and existing tenants.
New buildings would be exempt from the cap for the first 10 years to encourage development. Landlords who make significant improvements, such as installing double glazing or solar panels, could raise rents beyond the cap. The IPPR also recommends increasing housing benefit to cover the cheapest 30% of rents, costing an additional £600 million annually.
To prevent landlords from converting properties to short-term lets like Airbnbs, the thinktank proposes a new licensing system for short-term rentals and a cap on the number of nights a property can be rented out on a short-term basis. IPPR staff have presented these ideas to officials in the Treasury, Downing Street, and the Ministry of Housing, Communities and Local Government in recent weeks.
International Context
Other countries have implemented rent controls with varying success. Scotland introduced temporary rent controls in 2022, but rents surged after they expired last year. Academics note that while controls typically keep costs down for covered properties, rents on uncontrolled properties rise faster than they otherwise would.
