A group of MPs has urged Housing Secretary Angela Rayner to reconsider the government’s decision not to introduce rent controls in England, as new research explores how different limits on rent increases could affect tenants and landlords.
The letter, signed by 26 MPs, comes after research commissioned by the Joseph Rowntree Foundation and carried out by the Autonomy Institute examined three possible rent control models that could be introduced from next year.
The options include a cap linked to CPI inflation, a temporary freeze on rents, and a more moderate approach that would limit rent increases during a tenancy to CPI, while allowing increases of CPI plus 2% between tenancies.
According to the modelling, the measures could reduce tenants’ rental costs by 2031. The estimated annual saving per tenancy would be around £1,418 under a rent freeze, £701 under the moderate model and £130 under a CPI-linked cap.
MPs Highlight Rising Rental Costs
The MPs argue that high rents are placing increasing pressure on household finances.
They said renters are currently spending an average of 36% of their income on rent, with the figure approaching half of a person’s earnings in some parts of the country.
The group also highlighted the wider impact of high housing costs, arguing that households with a large proportion of their income going towards rent have less money available to spend elsewhere.
Their call comes shortly after separate research from the Institute for Fiscal Studies warned that rent controls could reduce the supply of privately rented homes.
This has become one of the main concerns surrounding any future rent control policy, particularly as the private rented sector continues to face pressure over costs, regulation and property supply.
Proposed Changes to Landlord Tax
The rent control models examined by the Autonomy Institute would also be introduced alongside changes to landlord taxation.
The proposals include restoring full mortgage interest deductions by reversing Section 24, as well as applying National Insurance contributions to income generated from rental properties.
The modelling suggests that without changes to landlord taxation, the proportion of tenancies involving landlords making a loss could increase from around 10% in 2024 to 17.05% by 2031.
Under the proposed reforms, the proportion would be lower, although the outcome would vary depending on the rent control model used.
The research estimates that loss-making tenancies would account for 12.48% under a CPI-linked cap, 14.16% under moderate controls and 15.33% under a full rent freeze.
The figures also suggest that landlords’ average post-tax return on equity, excluding capital gains, would fall under each of the proposed rent control options.
Government Rules Out Rent Controls
Despite the calls from MPs, the government has repeatedly said it does not intend to introduce rent controls in England.
Angela Rayner previously said that the government was not planning to impose rent controls, pointing instead to the protections introduced through the Renters’ Rights Act.
She also questioned whether rent controls have been effective at reducing rents in other parts of the UK, including Scotland.
The Autonomy Institute has argued that carefully designed rent controls could improve affordability without causing large numbers of landlords to leave the rental market, particularly if landlord costs are taken into account.
However, the government has made its position clear.
An MHCLG spokesperson said: “We have no plans to introduce rent controls.”
What Could This Mean for Landlords?
The debate highlights the growing divide over how the government should address rising rents while maintaining a healthy supply of rental properties.
For landlords, rent controls could limit the amount rents can be increased and potentially affect future rental income and investment returns. Supporters, however, argue that carefully managed limits could provide greater protection for tenants facing affordability pressures.
With the government currently ruling out rent controls, no immediate changes are expected in England. However, continued pressure from MPs and housing organisations means the issue is likely to remain part of the wider debate around the future of the private rented sector.
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