Rachel Reeves is considering forcing landlords to freeze rents for up to a year as it looks for ways to soften the blow from the Iran war on household budgets, as prices rise for food and fuel.
The chancellor is considering the move as part of a wider cost of living package to be unveiled in the coming weeks, The Guardian reported.
George Bangham, the head of social policy at the New Economics Foundation thinktank, urged the government to pursue the proposal. He said: “We have an affordability crisis in the private rented sector, which dates back to before the pandemic.
“We know rent controls can fix an affordability crisis if done carefully, we just need to be willing to impose them.”
But the idea met with immediate criticism from others, who say a better solution would be to build more houses and warn that the move could force private landlords to sell up and exit the rental market, reducing the supply of properties.
Ben Beadle, Chief Executive of the National Residential Landlords Association, said: “Introducing a rent freeze would be a disaster for landlord and investor confidence and consequently the supply of homes in England. 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.”
Robert Colville, head of the Centre for Policy Studies think tank, added: “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.”
Discussion over rental controls has featured heavily in election campaigning as voters across the country prepare to head to the polls next week.
Zack Polanski, the Green Party leader, has already called for rents to be frozen as part of his intent to end “rip-off Britain”. The Greens say they want the “effective abolition of private landlordism”.
The Treasury declined to comment on “speculation”.
New-build properties would be excluded from the rent freeze scheme so that developers don’t halt work on new homes already being built.
Labour promised to build 1.5m new homes this parliament, but is running well short of hitting that target.
While in opposition, Labour did previously consider a rent freeze proposal but forward by Stephen Cowan, the leader of Hammersmith and Fulham Council. It later rejected the idea.
According to figures from the Office for National Statistics around 20 per cent of households are in private rented accommodation.
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