Call for ‘fair rents’ system as prices rise in a ‘national phenomenon’

Private landlords face renewed pressure over rent controls after research found private rents are rising by between 6% and 9% a year in every region of England.

The New Economics Foundation (NEF) says rent rises are now a ‘national phenomenon’, with the lowest income private tenants spending 48.5% of their income on rent.

Its report calls for an ’emergency brake’ on rent increases, limiting rises to the lower of inflation or 2%.

The think tank is also calling for a phased return to a national ‘fair rents’ system, based on the model used for much of the 20th century before being abolished in the 1980s.

Under that approach, landlords would receive what the report describes as a fair rent, while tenants would be protected from excessive charges.

Reviving fair rents system

The organisation’s senior researcher, Molly Harris, said: “No matter who you are, living in an affordable, secure home is the foundation of a good life.

“But private renters are often pushed into overpriced and substandard homes.”

She added: “The Renters’ Rights Act is a valuable step forward in making private renting safer and fairer – but it doesn’t address the UK’s problem of runaway rents.

“Reviving a proven system that was in place for over 70 years, but redesigned for the 21st century, would make life more affordable for private renters across the whole country.”

Every region saw rents rise

Before the pandemic, NEF says annual rent rises ranged from around 1% in the North East to more than 3% in the east of England.

Since then, every region has recorded annual growth of between 6% and 9%, with the three fastest-growing markets all in north-west towns.

The report links worsening affordability to decades of housing policy, including the removal of rent controls, the sale of social homes through right to buy and the growth of buy to let mortgages.

NEF also argues that high rents affect the wider economy by transferring income from renters, who are more likely to spend, to landlords, who are more likely to save or reinvest in assets.

It says this suppresses consumer demand and directs billions of pounds in housing benefit to private landlords.

The proposed emergency brake would apply within and between tenancies until a fair rents system is established.

Declare local rent pressures

NEF also says mayoral combined authorities should be given powers to declare local rent pressure and run fair rent pilots, with rent levels linked to local indices rather than uncapped market rents.

The report proposes a gradual roll-out in areas with the steepest rent rises, to avoid rent crashes or sharp increases in tenancy churn.

New-build homes would be exempt from the emergency brake and fair rents system for a period, before being phased in later.

NEF says its proposals draw on rent regulation systems in France, Germany, Ireland and Spain.

The report also points to polling by Ipsos MORI in 2024 which found 71% of the public supported capping annual rent rises at no more than the national inflation rate, while 8% opposed the policy.

A separate YouGov survey for Common Wealth found 75% support for rent controls linked to property quality and location.