Rent controls risk landlord exodus – Propertymark
1 month ago | 10 comments
Rent controls cut home supply – Institute for Fiscal Studies
9:04 AM, 26th August 2026, 3 weeks ago
6
Categories:
Rent controls are likely to reduce the supply of homes available to tenants and push some landlords to leave the market, according to research from the Institute for Fiscal Studies (IFS).
It says that private renters spent an average 28% of their household incomes on housing costs in 2024–25, compared with just over 11% across households generally.
The IFS says evidence from countries including Ireland, Germany and parts of the US, shows controls can lower costs for tenants already living in affected properties, but can also produce unintended consequences.
Its review found landlords became more likely to sell to owner-occupiers or convert properties to other uses where controls were introduced.
Supply falls under controls
IFS report authors Matthew Oulton and Tom Wernham write: “The evidence suggests that, unless UK housing markets differ substantially from those in the countries that have implemented them, rent controls would be a costly way to alleviate pressure on housing costs and support renters.
“Rent controls might partly achieve policymakers’ distributional aims by decreasing costs for some tenants and reducing tenants’ uncertainty over rents (at the expense of landlords).”
They added: “But the experience of other countries where controls have been introduced suggests other tenants would likely be made worse off by these controls, as more tenants struggle to find homes to meet their needs and the quality of rental homes declines.
“Lower-income and lower-wealth tenants with less scope to leave the private rented sector are likely to be particularly affected.”
Property quality can fall
The IFS says every study considered in a major 2024 evidence review found that rent controls reduced the supply of homes available to tenants, with some research also finding lower rates of housebuilding.
Evidence from New York found a 36% increase in ‘immediately hazardous’ building code violations following the introduction of controls.
The report says landlords facing restrictions on rent increases may respond by cutting renovation or maintenance spending where there are still plenty of prospective tenants.
Controls can also make it harder for households to move, with tenants potentially remaining in homes that no longer meet their needs because suitable alternatives are difficult to find.
Alternatives to rent controls
The IFS also points to Germany, where controls introduced in 2015 ultimately had no effect on average rents after about a year because of the way exemptions operated.
Research from Oslo also found that some landlords sought other forms of compensation, including extra services from tenants or deposits worth 10 or even 20 months of rent, requirements which largely disappeared after controls were removed.
The report argues that increasing the overall supply of housing through investment or planning reform would tackle the underlying pressure on housing costs more directly.
It also says tax and benefit policy could target financial help more closely at lower-income tenants rather than giving the largest benefit to people who already occupy rent-controlled homes.
Tags:
IFS rent controls, landlord housing supply, Landlord rent controls, Private Rented Sector, rent control evidence, rent controls
6 comments on this article
Learn from your peers’ experience
A different perspective could help you spot an issue, avoid a mistake or find a better way forward. Read the comments and add your own views if you wish.
Previous Article
Landlord tax holds back buy to let investmentRelated Articles
Labour urged to regulate private rents
1 month ago | 15 comments
Tenant group claims soaring rents leave renters paying the price
2 months ago | 5 comments
Member Since May 2018 - Comments: 2518
11:56 AM, 26th August 2026, About 3 weeks ago
Rent controls do cut home supply. That’s well established. Mr. Burnham was on the television yesterday saying that he was going to have the biggest council house building programme since the 2nd world war. But the question is, how is he going to pay for it?
https://hotminute.co.uk/2026/07/21/burnhams-council-housing-promise-has-a-16-billion-problem/
The link above says amongst other things:
The National Housing Bank launched in April 2026 with £16 billion in capacity
Fiscal rules block the bank from straightforwardly funding council-owned homes
Burnham promised the biggest council house building programme since the post-war period
So whose assets is he going to take in order to pay for council-owned-homes (as opposed to more social housing which can be funded in other ways)?
Member Since October 2013 - Comments: 1733 - Articles: 3
12:56 PM, 26th August 2026, About 3 weeks ago
Reply to the comment left by Beaver at 26/08/2026 – 11:56
Hmm! 🤔
Member Since January 2025 - Comments: 128
1:00 PM, 26th August 2026, About 3 weeks ago
… this is a short-term phenomenon. Rent controls will not force rents upwards indefinitely. Unless the owner-occupied market can absorb former rental properties through sales, the Government knows that many landlords will eventually be compelled to continue letting simply to mitigate their holding costs. Leaving properties empty will offer little refuge: councils already impose substantial council tax premiums on empty homes, rising to four times the standard charge.
The Renters’ Rights Act 2025 was an ingenious piece of legislation designed to strip away the practical benefits of property ownership while leaving landlords carrying the capital, maintenance, regulatory and occupational risks. Its underlying mechanisms can now be progressively calibrated through secondary legislation, enforcement policy and tribunal decisions, enabling government to test how much further value and control can be transferred before the market reaches breaking point.
At that point, property values will be materially depressed. Government—or public bodies acting with government support—may then acquire properties compulsorily, financed through publicly backed housing bonds. Private landlords would have carried the risks and absorbed the losses; the state would acquire the assets at diminished values; and, through taxation and public borrowing, we would all become the landlords.
The market needs to recognise that this is not merely another cycle of housing regulation. It represents an ideological transformation of the property market. Labour has waited since the Housing Act 1988 introduced assured shorthold tenancies and section 21 to reverse the settlement that encouraged private capital into rented housing. It is not trying to achieve its objective overnight. The process will grind away over many years, steadily transferring control while leaving legal ownership—and therefore liability—with the private landlord until the final stage becomes politically and economically achievable.
Meanwhile, countless column inches will be devoted to the minutiae of individual regulations, tribunal decisions and implementation dates. But step back, examine the wider picture in its political and historical context, and every move in the game of chess is writ large. Only a change of government accompanied by a genuine change of ideology—not merely a different management team administering the same system—will alter its ultimate destination…
… the question is whether landlords are prepared to come together in sufficient numbers to create a voice powerful enough to secure that change. Most organisations currently claiming to speak for the sector are increasingly preoccupied with teaching landlords how to comply more efficiently with each successive transfer of their rights, control and economic value. In effect, they are showing landlords how most efficiently to surrender everything associated with ownership—except, for the moment, bare legal title and the liabilities that accompany it—to regulators. If landlords want to get back to running private businesses and stop being extensions of the state, new thinking and new action is urgently needed…
Member Since May 2018 - Comments: 2518
1:09 PM, 26th August 2026, About 3 weeks ago
Reply to the comment left by NewYorkie at 26/08/2026 – 12:56
There is nothing new in what the IFS is saying here, the fact that rent controls drive rents up is well established:
https://en.wikipedia.org/wiki/Rent_control
The SNP recently proved that again in Scotland:
https://www.telegraph.co.uk/money/property/buy-to-let/rent-controls-damage-housing-market-drive-up-rents/?msockid=0b8a4155c7db6ba1058955b1c6196a07
But Mr Burnham now needs even more social housing than he did before because labour’s Renters Rights Act makes it even more risky to house social housing tenants than before the Act and is ALSO driving rents up. So yes…britain needs more social housing for people who cannot be accommodated in the PRS at all anymore. But if you needed even more social housing than before would you really risk giving the money to a council, given that councils go bankrupt?
https://www.bbc.co.uk/news/uk-politics-66878229
As a taxpayer do you think that labour would be likely to try to raise its £16 billion, or much of it, by raising capital gains tax? And given that councils go bankrupt and housing funds are not ring-fenced, if you were the citizen-tax-payer having the tax taken off you would you want any of your elected representatives to risk anyone giving the money to a council? Particularly a a labour-controlled council?
Member Since May 2018 - Comments: 2518
1:13 PM, 26th August 2026, About 3 weeks ago
Reply to the comment left by Person Of The People at 26/08/2026 – 13:00
I’m not sure how short-term this is although I think that this government does think short-term. I do get annoyed with their current 1947-Ni-Bevan-Fairyland announcements. It isn’t 1947 and this Labour version of HS2 is going to come up with a bump against reality in the form of the money-markets.
But Norway doesn’t have a lot of council housing even though it does have a lot of social housing. There are other models for social housing….charities (those that house people, not Shelter), mutuals, cooperatives. I have no faith in anybody that thinks it is still 1947 or 1976.
Member Since July 2013 - Comments: 523 - Articles: 1
8:44 AM, 27th August 2026, About 3 weeks ago
Reply to the comment left by Person Of The People at 26/08/2026 – 13:00
Spot on. Another thing to add is this:
Interestingly, Mr Bumham has another card to play – and we are sure it will be played in October in the budget.
This involves raising capital gains tax rates to align with income tax rates. So, most landlords will see them hiked to 40 or 50%. This will make more of them stay in the market than would otherwise happen, so keeping a little bit of the private rented sector alive – whilst it still has some use and before the effective nationalisation, (that you speak of by a thousand cuts), of the private rented sector is complete.