Labour has been urged to take immediate action to tackle rising rents as ministers are warned that new housing laws won’t go far enough to combat affordability.
Runaway rents are a “national phenomenon”, a new report from the New Economics Foundation (NEF) has found, rising between 6 and 9 per cent every year in every region across England.
These regular above-inflation increases have left the lowest-income renters spending just under half their income (48.5 per cent) on rent, researchers add.
Labour’s Renters’ Rights Act, which came into force this month, made sweeping changes to the rental system, including the abolition of Section 21 eviction notices, an end to fixed-term contracts, and a limit on rent-in-advance requests.
These are welcome security-boosting measures, the NEF said, but argues that the government must go further in also improving affordability for renters.
Its report urges Labour to implement an “emergency brake” on rent rises, capping them to the lowest of inflation or two per cent. This triple-lock-esque measure would be a precursor to a sector-wide “fair rents” policy that would see excessive rent rises ended for good, mirroring a policy that was in place in England until the 1980s.
Molly Harris, senior researcher at the NEF, said: “No matter who you are, living in an affordable, secure home is the foundation of a good life. But private renters are often pushed into overpriced and substandard homes.
“Reviving a proven system that was in place for over 70 years, but redesigned for the 21st century, would make life more affordable for private renters across the whole country.”
Under current laws, tenants are able to challenge above-market rent rises by applying to a tribunal. Labour’s reforms have empowered more renters to make use of this, and have put a limit on rental increases to once a year. However, no form of rent cap or controls was introduced as part of the bill.
Following recent speculation that Labour ministers were considering these policies, housing minister Matthew Pennycook said: “We are not doing this. It’s not a credible or serious policy proposition.
“I can’t remember how many times I’m on record of saying this government has no intention, does not agree with rent controls, and there are really good reasons for that.”
The NEF report also called for:
- New powers for mayoral combined authorities to declare local rent pressure and run “fair rent” pilots, with rent levels set by reference to local indices rather than uncapped market rents
- A gradual implementation of fair rents in areas of the country with runaway rents through a long-term phased process to avoid rent crashes or excessive churn in tenancies
- An exemption for new-build properties from the emergency brake and fair-rent system for a period, and then gradually phase them into the fair-rent system
Responding to the proposals, London’s deputy mayor for housing, Tom Copley, said: “I welcome this report – London needs rent stabilisation to help make renting more affordable.
“The Renters’ Rights Act is a vital and transformational step in the right direction, and the mayor’s longstanding belief is that ministers should devolve the power to cap rent rises so we can tackle these issues in the capital. Evidence clearly shows that Londoners would overwhelmingly back new plans to put a cap on rent increases.”
The report comes amid a clamour of calls for the government to consider action on rising rents. Research from the Joseph Rowntree Foundation and the Autonomy Institute released on the same day found the majority of English landlords are recording higher returns compared to similar benchmark investments, at 74 per cent in 2018, 99 per cent in 2021 and 63 per cent in 2024.
Introducing a rent control that caps in-tenancy rent increases at the inflation rent, and caps between tenancy increases at this level plus 2 per cent, could save renters almost £1,200 per year on average within six years, the joint report added.
A Ministry of Housing, Communities and Local Government spokesperson commented: “The Renters’ Rights Act brings the biggest reforms to renting in over 40 years, shielding private tenants from rogue landlords, financial exploitation and being evicted for no reason.
“This act already stops rent from rising more than once a year, gives tenants the power to challenge increases above the market rate and bans rental bidding wars.
“A one-month cap on rent in advance is also now in force – so no one has to pay significant amounts just to secure a tenancy.”
Starmer latest news: Rayner suggests PM should consider resigning
Rayner ‘cleared by HMRC over tax affairs’ amid uncertainty over Starmer’s future
From primary school prison visits to the cusp of No 10: The rise of Wes Streeting
Magistrate dialled into court from Portugal home, claims whistleblowing official
Boost for Reeves as GDP shows 0.6% growth despite Iran war crisis
Prince Harry says Nazi uniform ‘mistake’ inspired his fight against antisemitism
