The Institute for Public Policy Research has proposed a rent control mechanism for England’s private rental sector that would cap rent increases at whichever is lower between consumer price inflation or wage growth.
The proposal comes as Chancellor Rachel Reeves prepares to announce measures addressing rising living costs later in May. The IPPR, which maintains close ties to the Labour government, has been presenting its recommendations to officials at the Treasury, Downing Street, and the Ministry of Housing, Communities and Local Government in recent weeks.
Market impact and exemptions
According to the IPPR’s calculations, 2.4 million people in the UK currently face unaffordable rents, defined as housing costs exceeding 30% of gross income. This figure is projected to increase by 340,000 by the end of the decade.
Under the proposed ‘double lock’ system, rent caps would apply to both existing tenancies and new tenants. However, newly constructed properties would be exempt from the cap for 10 years to maintain development incentives. Landlords who make substantial improvements, such as installing double glazing or solar panels, would be permitted to raise rents beyond the cap.
The timing of the proposal coincides with ongoing pressures on the rental sector, as landlords navigate increasing regulatory requirements. The thinktank’s recommendations also include expanding housing benefit to cover the cheapest 30% of rents, at an estimated annual cost of £600 million.
Short-term rental restrictions
To prevent landlords from converting properties to short-term lets, the IPPR proposes introducing a licensing system for platforms such as Airbnb and implementing caps on the number of nights a property can be rented on a short-term basis.
Maya Singer Hobbs, the paper’s author, stated: “There are millions of people living with unaffordable housing costs, and if you want to bring those down quickly there are not many options.”
The proposal follows reports that Reeves had considered a one-year rent freeze, which Downing Street subsequently ruled out. The chancellor told the Commons last month she would “use every lever we have to bear down on the cost of living, including for people in the private rented sector.”
International precedents
Rent control mechanisms have been implemented in various countries with mixed results. Scotland introduced temporary rent controls in 2022, though rents increased sharply after the measures expired in 2024. Academic research indicates that while controls typically reduce costs on covered properties, rents on exempt properties tend to rise faster than they would otherwise.
The proposal adds to uncertainty in a sector already experiencing significant regional variation in rental markets, as investors and landlords assess the regulatory landscape.
The chancellor’s cost of living package, expected later this month, will indicate whether the government adopts any form of rent control mechanism for England’s private rental sector.