Think tank urges government to introduce rent controls

A left-wing think tank has called on the government to introduce rent controls to tackle “unaffordable housing costs”.

The Institute for Public Policy Research (IPPR) warns more than 2.5 million renters could end up living in unaffordable housing without government intervention.

The call comes as the National Residential Landlords Association (NRLA) has urged the next Welsh government not to introduce rent controls.

Current system leaves renters exposed

The think tank claims the government should stabilise rent increases through a “double lock” system, limiting annual rent rises to whichever is lower than inflation or wage growth.

According to the think tank, if the system had been introduced in 2020, rents would be around 7% lower by the end of the decade, saving the average renter about £850 a year in England and more than £1,700 in London.

It also estimates the policy would reduce the number of households facing unaffordable rents by 140,000 compared with no intervention.

Dr Maya Singer Hobbs, senior research fellow at IPPR, explains: “Millions of renters are being pushed to the brink by a housing market that simply isn’t working for them. This is no longer a marginal issue affecting a small group, it is a mainstream cost-of-living crisis hitting working households across the country.

“Without action, things will get worse. The current system leaves renters exposed to global shocks and rising costs they have no power to control.

“The government has taken important steps to strengthen renters’ rights, but it now needs to go further. A fair system of rent caps would rebalance the market, protect households from sharp increases, and ensure that rents grow in line with what people can actually afford.”

Slam the brakes on soaring rents

Generation Rent has also called for rent controls, claiming more than four months of renters’ income in a year now goes directly to their landlord.

Pointing to data from the Office for National Statistics (ONS), private renters in England spend 36% of their gross income on rent.

Ben Twomey, chief executive of Generation Rent, said: “It’s not right that over four months of our income every year is being swallowed up by landlords. While it was encouraging to see the government recognise this through its recent consideration of a rent freeze, we need to see longer-term action.

“Renters in some of our biggest cities are facing the most back-breaking costs. The government must urgently give metro mayors the power to slam the brakes on soaring rents through limiting rent increases.”

Drive landlords out of the market

However, industry experts and politicians have warned that introducing rent controls will do more harm than good.

Sir James Cleverly, the shadow housing secretary, told The Telegraph: “Rent controls would be completely disastrous for tenants. Cap what landlords can charge and you shrink supply, push rents for new tenants higher and drive landlords out of the market altogether.”

“Labour’s red tape and higher taxes have already forced up rents and reduced choice for renters.”

Paul Shamplina, founder of Landlord Action, told The Telegraph: “We understand affordability issues, but rent controls simply do not work. Landlord panic has been at its height under the Renters’ Rights Act, that was the straw that broke the camel’s back, and good landlords are leaving the sector.”

Rent controls would be a disaster

The news comes as Plaid Cymru pledged to “better protect renters” as they emerged as the largest single party in the Senedd in the Welsh elections, although without majority control.

However, the NRLA have warned the next Welsh government introducing rent controls in Wales will disincentivise investment in the private rented sector.

Chief executive of the NRLA, Ben Beadle, said: “Rent controls would be a disaster for renters and the Welsh private rented sector. These measures will reduce the supply of private rented accommodation at a time when Wales is suffering from an unprecedented supply crisis.

“Wherever rent controls have been introduced, they have failed and, in this case, would not address the root causes of high rents, the spiralling costs investors face, which are passed on to tenants through increased rents.

“Whatever the outcome of coalition negotiations, we look forward to working with ministers in the next government to ensure Welsh landlords’ concerns are taken into account.”