Reeves rent freeze proposal dubbed ‘disaster’ for renters and landlords
Rachel Reeves has fuelled rumours she is considering a rent freeze as leading economists said the policy would be a “disaster” for renters and landlords.
Addressing the Commons on Tuesday afternoon, the Chancellor was asked by a Labour MP to implement a freeze on private rents.
“I will do everything in my power and use every lever we have to bear down on the cost of living, including for people in the private rented sector,” Reeves said.
The Chancellor is reportedly considering banning landlords from raising rents for private sector homes for one year, in a bid to protect renters from the impacts of the Iran war.
The government had previously resisted imposing rent controls as part of its upcoming renters’ rights act, which will ban “no-fault” evictions.
The proposed rent freeze, first reported by The Guardian, comes as ministers are reportedly willing to consider exceptional measures to protect household budgets as inflation begins to tick up.
But leading economists were quick to snub the plan, with Robert Colvile, head of the Centre for Policy Studies, describing it as a “mind-boggling scale of intervention in the private market”.
“If the government wants to bring rents down it should build an awful lot more houses,” he said.
Labour housebuilding performance criticised
Simon French, chief economist at Panmure Liberum, said: “There is a scenario where this policy would have got a more sympathetic hearing at the start of the Parliament when the previous decades of failure to build could have been cited as (loose) justification.
“But having presided over a slowdown in housing starts and rental reforms that are making the UK supply side less flexible then this is a rather harder sell.”
The government has pledged to build 1.5m homes by the next general election but housebuilders and construction figures say this target has become nearly impossible.
A leading construction trade body told CityAM the government’s inheritance tax regime is preventing firms from scaling up housebuilding, and the head of construction firm Breedon said the target was “impossible the day it was announced”.
The British Property Federation, the trade body for the real estate industry, said there is “no surer way for the Government to kill off its ambitions to deliver the homes we desperately need” than implement rent controls.
‘Disaster for landlord confidence’
The National Residential Landlords Association has also rounded on the rent freeze proposal, saying a it would harm renters as well as landlords.
The industry body’s chief executive, Ben Beadle, said: “Introducing a rent freeze would be a disaster for landlord and investor confidence and consequently the supply of homes in England.
“There is no evidence to suggest that it would make rents more affordable. In fact, the impact on supply would inevitably drive new rents still higher.”
Kallum Pickering, chief economist at Peel Hunt, questioned whether a rent freeze would bring down costs, writing on X: “Price fixing breaks economies… Totally misguided thinking here.”
Propertymark, the trade body for estate agents, dubbed reports of a rent freeze as “alarming”.
Its head of policy, Timothy Douglas, said: “Rent controls risk distorting the market and undermining investment at a time when demand already far outstrips supply.
“If the UK Government is serious about improving affordability, it must focus on increasing housing supply and supporting long-term investment in the private rented sector.”
The rumoured rent freeze comes as the government’s renters’ rights act is set to take effect on Friday, which landlords say is causing them to sell up.
London law firm Thackray Williams said it has seen a wave of last-minute selling instructions as landlords hope to dodge the red tape caused by the new rules.
The Treasury has refused to comment on “speculation”.