The Institute for Public Policy Research (IPPR), a thinktank closely aligned with the Labour government, is pressing ministers to implement private sector rent controls in England. This comes as Chancellor Rachel Reeves considers measures to address a surge in living costs exacerbated by the Iran war.
Proposed 'Double Lock' Mechanism
The IPPR has published a paper advocating for a rent 'double lock,' which would tie rent increases to either wages or inflation, depending on which is lower. This approach aims to protect tenants from excessive hikes while maintaining some flexibility for landlords.
Maya Singer Hobbs, the paper's author, 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.'
Current Context and Government Considerations
The Guardian previously revealed that Reeves had considered a one-year rent freeze to combat rising inflation, now deemed inevitable by economists. However, Downing Street quickly dismissed that idea. With the Iran war entering its 11th week and the Strait of Hormuz still closed, inflation in the UK is expected to be among the highest in the G7 this year.
Reeves is set to deliver a speech later this month outlining her plans, which are likely to include support for energy bills. Government sources indicate she is exploring various measures to reduce consumer prices, though a rent freeze was ruled out due to concerns it could hinder housebuilding.
The chancellor told the Commons: 'I will do everything in my power and use every lever we have to bear down on the cost of living, including for people in the private rented sector.'
Scope of Unaffordable Rents
The IPPR calculates that 2.4 million people in the UK currently have unaffordable rents, defined as costing more than 30% of their gross income. This number is projected to rise by another 340,000 by the end of the decade.
Details of the IPPR Proposal
Under the IPPR's plan, private sector rents would be capped at the lower of the 12-month average of consumer price inflation or wage growth. This cap would apply to both new and existing tenants.
To encourage new housing development, any newly built properties would be exempt from the cap for the first 10 years. Landlords who make significant improvements, such as installing double glazing or solar panels, would also be permitted to raise rents above the cap.
The thinktank also recommends increasing housing benefit to cover the cheapest 30% of rents, at an additional cost of £600 million per year. To prevent landlords from converting properties into short-term holiday lets, the IPPR 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.
Engagement with Government Officials
IPPR staff have been presenting their ideas to officials in the Treasury, Downing Street, and the Ministry of Housing, Communities and Local Government in recent weeks.
International Examples and Academic Insights
Other countries have introduced rent controls with mixed results. Scotland implemented temporary rent controls in 2022, but rents surged sharply after they expired last year. Academics note that while controls typically keep costs down for properties covered by the cap, rents on uncovered properties tend to rise more quickly than they otherwise would.
