Downing Street has dismissed the idea of a freeze on private sector rents, even as Chancellor Rachel Reeves left the door open to such a move. A No 10 spokesperson said on Tuesday that freezing private sector rents was “not the approach we will be taking” after sources revealed it was Reeves’s preferred solution for dealing with a spike in housing costs following the Iran war.
The spokesperson added: “We have no plans to implement this. Our focus remains on cutting bills and backing renters alongside lower energy prices.” However, Reeves failed to rule out the idea when asked in the Commons, telling Labour MP Yuan Yang: “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.”
The chancellor was understood to have been considering a one-year rent freeze on private sector landlords as part of a package to help households deal with the fallout from the Middle East conflict. The freeze would exclude newly built properties to encourage housebuilding. The measure would mark a significant reversal for Reeves, who resisted rent controls as part of Labour’s renters’ rights reforms coming into force on Friday.
The news sent shares tumbling in some of the UK’s biggest buy-to-let lenders, such as Paragon and One Savings Bank, but was welcomed by some Labour MPs. Economists say the UK will be hit harder than any other developed country by inflation resulting from the Iran war, which has closed shipping lanes and sent oil prices soaring. Experts warn a freeze could reduce the overall supply of rental properties, undermining Labour’s promise to build 1.5m homes.
Konstantin Kholodilin, a researcher at the German Institute of Economic Research, said: “Studies show that controlled rents tend to fall on average by 9.4% but, during that period, those which are not controlled in the same area or nearby rise on average 5% faster than they would have done otherwise.” Labour MPs appeared divided, with some welcoming the idea and others, like Chris Curtis of the Labour Growth Group, calling it “a dead end”.
