The aim of rent controls is to provide stability for tenants and prevent evictions, but critics of the initiative say they’re not fixing the housing crisis.
Government ministers, local authorities, landlord and tenant groups and the public are talking about rent control UK-wide. It has become a hot topic, largely due to implementation discrepancies.
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What is rent control?
Rent control involves putting in place a rent freeze, which is mandatory by law, with the aim of preventing private landlords from increasing rents, especially during the current financial crisis.
Previously, housing associations had been permitted to increase rents by the rate of consumer inflation, plus an additional 1%. However, Chancellor Jeremy Hunt changed the rules in November 2022. Now, social rents are capped at a 7% increase until the end of the 2023/24 financial year.
Media reports suggest the economic crisis has worsened an existing situation, in which property demand is high and supply low. People are delaying getting on the property ladder because they can’t afford a mortgage.
With many renters struggling to afford a home, reports alleged some rental properties were going to the “highest bidder” – poorer tenants were being effectively “gazumped”. Rent control was introduced to stop these practices and create a more level playing field for tenants and landlords.
Rent control London
The Mayor of London, Sadiq Khan, has called for rent controls to be put in place in the capital, although he doesn’t currently have the power to introduce them. He has made a fresh plea to government ministers to introduce rent controls in view of new statistics that suggest private rents in London are heading for a significant rise.
The current average private rent in London is £2,567 a month, but new data from Rightmove suggests it could rise to more than £2,700 a month. Analysts predict a rent freeze could save private tenants an average of £3,374 over a two year period.
Mr Khan claims the figures reveal why rent controls are necessary, as almost one-third of London’s population is made up of private tenants. He says they are “consistently let down” by the government.
Elsewhere in England, councillors in Bristol have been lobbying the government for permission to introduce rent controls. A report compiled by the University of Bristol found there was popular support for rent controls to help tenants during the financial crisis.
According to data from the city council, private rents in Bristol have more than doubled during the past decade, with people leaving because they can no longer afford to live there.
Rent control Scotland
In Scotland, the former first minister Nicola Sturgeon introduced rent control in September 2022 to address what she described as a “humanitarian crisis”.
Renters in Edinburgh and Glasgow are particularly hard hit by high rents and the availability of properties has dwindled further.
The government had aimed to protect tenants by introducing legislation to freeze rents in both private and social housing. However, almost one year on, it is reported both landlords and tenants are “disappointed” by the outcome of the initiative.
Tenants say the legislation doesn’t do enough, as the emergency laws introduced by the Scottish Parliament applied only to existing tenancies. When signing new agreements, landlords could set whatever price they wanted.
Are Scotland’s rent controls working?
Neither tenants nor landlords are particularly happy about the housing crisis. While renters say the legislation doesn’t go far enough, landlords fear Scotland’s rental market has become unviable as a result of the freeze.
When considered alongside the current high inflation, they say they can’t claw back increasing costs for property maintenance when rents are low. Many landlords are reportedly getting out of the rental market altogether as a result.
Rent control Wales
Wales is in the middle of a consultation exercise on rent control. The Welsh government is considering restrictions on the rent private landlords can charge to tenants. Officials are gauging the views of landlords and the public on several initiatives, including rent freezes.
According to a BBC report, tenants who have faced rent rises recently are struggling to survive. For many, this means having to look for cheaper accommodation.
However, landlords in Wales say rent controls would spell “disaster” for them. There are already some controls in the social housing sector, but no laws governing homes rented from private landlords.
Discussions are continuing, with political analysts suggesting a new law could form part of a Welsh government deal to co-operate with Plaid Cymru.
Pros and cons of rent controls
While a rent freeze can help protect vulnerable tenants from the threat of eviction, critics say it doesn’t solve the long-term crisis.
Bob Blackman, the Conservative MP for Harrow East, has also warned that a rent freeze could detrimentally affect landlords. He also suggested it could adversely impact the government’s plan to build 300,000 more homes each year to alleviate the housing crisis, as property companies would find it too difficult to raise enough money for the projects.
Critics claim rent controls fail to fix the core issues of the housing crisis, including the current lack of supply, but they do enable tenants to manage their budgets more efficiently.
For buy-to-let landlords, whose income relies on the rent of a property, the rent freeze could make the cost of living crisis even more serious. Reports suggest many landlords are already facing a choice between heating their home and eating as mortgage rates continue to rise. Unless rents keep pace, they will be feeling the pinch even more.
In addition, say critics, it puts further pressure on landlords who are already struggling to pay for the maintenance of their buy-to-let properties. This could lead to many more leaving the sector.