Legal experts say rent controls risk landlord exits

Landlords could face weaker returns and may be pushed towards selling if ministers reverse course and introduce rent controls in England, property lawyers have warned.

Kristine Ng, a partner at Morr & Co, and Paul Rooke, a partner at Mayo Wynne Baxter, said restrictions could discourage investment and reduce the number of homes available to tenants.

The warning follows a warning from the Institute for Fiscal Studies which found private renters spent an average 28% of their household incomes on housing costs in 2024–25, compared with just over 11% across all households.

Meanwhile, a group of 26 Labour MPs have urged housing secretary Angela Rayner to reconsider the government’s refusal to introduce controls in England.

Investment may shift

Ms Ng said: “The Institute for Fiscal Studies has highlighted a concern that many landlords, investors and property professionals will recognise: if returns become increasingly restricted, investment is likely to move elsewhere.

“Whilst rent controls may provide greater certainty and short-term protection for tenants, they also risk discouraging investment in the private rented sector at a time when housing supply is already under significant pressure.”

She added: “The IFS analysis suggests that, if landlords respond by selling properties, there could be downward pressure on house prices and a reduction in the number of homes available to rent.

“That may benefit some prospective buyers, but many renters are not yet in a position to purchase and will continue to rely on the private rented sector.”

Three controls modelled

Research commissioned by the Joseph Rowntree Foundation and undertaken by the Autonomy Institute modelled three possible forms of rent control from next year.

The options are a CPI-linked cap, a nominal freeze and a moderate system limiting rises during tenancies to CPI, with increases between tenancies capped at CPI plus 2%.

The model estimated annual savings for each tenancy by 2031 of £1,418 under a freeze, £701 with moderate controls and £130 under a CPI-linked limit.

Each proposal was paired with restoring full mortgage-interest deductions by reversing Section 24 and applying National Insurance contributions to landlord property income.

Two-tier market risk

Mr Rooke said: “The most important consideration is the risk of unintended consequences.

“Rent controls can create a two-tier market, benefiting existing tenants while making it harder for new tenants to secure accommodation.”

He added: “They may also discourage investment in maintenance and improvements, as well as limiting the supply of rental housing over time.

“The challenge will be ensuring affordability is improved without reducing choice, quality and availability across the rental market.”