Reeves’ rent freeze idea clashes with landlord rent rise plans

Property118

Reeves’ rent freeze idea clashes with landlord rent rise plans

Landlords planning rent increases are on a collision course with Chancellor Rachel Reeves’ proposals for a potential year-long rent freeze, with research showing most are already adjusting rents in response to incoming legislation.

Pegasus Insight’s latest Landlord Trends survey shows 61% of landlords intend to raise rents over the next 12 months.

Among that group, 75% point directly to the Renters’ Rights Bill for shaping that decision.

The figures surface as reports suggest the Chancellor is mulling a temporary freeze on rents in the private rented sector as part of measures aimed at easing pressure on household budgets.

The Treasury has declined to comment on media reports, describing them as speculation.

Unprecedented PRS intervention

However, Mark Long, the founder and managing director of Pegasus Insight, said: “A rent freeze would represent unprecedented intervention in the private sector, thwart the business plans of the majority of landlords and potentially force some out of business.

“Landlords are not setting rents in a vacuum.

“Many are already factoring in the impact of the Renters’ Rights Bill, alongside higher costs, and that is feeding directly into pricing decisions.”

He added: “Introducing a rent freeze into that environment could be the straw that breaks the camel’s back for those already struggling to balance the books.”

Move will reduce supply

Timothy Douglas, the head of policy and campaigns at Propertymark, said the reported plans come as the Renters’ Rights Act takes effect on Friday.

He said: “With the UK government introducing huge regulatory change through the Renters’ Rights Act, which will ultimately mean less flexibility and higher costs for landlords and tenants, it is alarming to hear reports that the Chancellor is considering additional rent control measures – particularly when Housing Ministers have recently publicly denounced their role.

“Evidence from across the UK, particularly in Scotland, shows rent controls restrict supply, deter investment, and reduce choice for tenants. Singling out landlords to solve the cost of living is not the answer.”

He added: “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, rather than introducing measures that will ultimately make it harder for renters to find a home.”

Creates landlord confusion

Other industry reaction is just as scathing with Oli Sherlock, the managing director of insurance at Goodlord, said: “Floating the idea of a blanket rent freeze on top of the Renters’ Rights Act feels like policy duplication at best, and outright confusion at worst.

“At a time when landlords, agents and tenants are trying to prepare for the biggest legislative shift in decades, this kind of political ‘kite-flying’ is deeply unhelpful.”

He added: “More fundamentally, the evidence on rent controls over the medium to long term is pretty clear.

“They tend to reduce supply, distort the market, and ultimately make things worse for the very tenants they’re supposed to protect.

“If the goal is to improve affordability and stability in the private rented sector, we need clarity and consistency; not overlapping interventions that risk undermining confidence just as the sector is adjusting to major reform.”

Knee-jerk policy

Elsewhere, concerns extend to supply and development and Melanie Leech, chief executive of the British Property Federation, said: “We recognise the current pressures on individuals and households, but there is no surer way for the government to kill off its ambitions to deliver the new homes we desperately need, and the jobs and tax revenue that flow from that, than well-intentioned but inept knee-jerk government intervention.

“If a temporary rent freeze is being considered by the Chancellor, she must learn the lessons of the disastrous impact of the failed attempt to introduce rent controls in Scotland with rents for new lets rising significantly after controls were introduced, alongside a standstill in new home-building.”

Olivia Harris, the chief executive of housing charity Dolphin Living, said: “Any proposals to introduce a one-year rent freeze within the private rented sector risk addressing only the symptoms, rather than the root cause, of the housing cost-of-living crisis.

“The fundamental issue remains that there is a severe shortage of rental homes across the UK which is limiting consumer choice and keeping rents high.”

He added: “The solution is to build more homes, especially those of an intermediate affordable tenure, which can help address many of the affordability issues we are currently experiencing, rather than introducing a measure that will discourage future investment and accelerate of the number of smaller landlords looking to exit the market, thus exacerbating the demand/supply imbalance.”

Watch James O’Brien vs landlord

Property118 readers may be interested in this segment of the James O’Brien show on LBC. It’s called ‘Choose your fighter: James O’Brien vs landlord’ in which he goes head-to-head with landlords discussing Rachel Reeves’ move to bring in a rent freeze. He also uses the phrase that he would ‘break out the world’s tiniest violin’ for moaning landlords.

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