Rent freeze rumours: Could landlords be punished for economic impact of war in Iran?

A one-year rent freeze could be on the cards as part of Rachel Reeves’ plans to tackle the cost-of-living crisis set to be exacerbated by the war in Iran. 

According to a report in The Guardian, Reeves’ proposals would see landlords in England banned from raising rents for a 12-month period – a move we are warning would be disastrous for landlords and tenants alike.  

According to the newspaper, the proposals are being put forward as part of a broader package to tackle rising bills across the board, set to be launched in the coming weeks.  

It also suggests the move could be timed to coincide with local elections – with Labour, at present, expected to see a big hit come polling day. 

Sources are quoted as confirming a ‘number of interventions’ in the rental market are under discussion, with this the favoured option. 

This is despite the Government reiterating just last week that there are no plans for rent controls, with housing minister Matthew Pennycook citing international evidence, proving they don’t work. 

The Treasury originally refused to confirm or deny the rumours, saying it would not comment on “speculation”. However, Downing Street has subsequently issued a statement rejecting the claims, with a spokesperson saying: “Just to be completely clear, that is not the approach we will be taking”.

This came after The Financial Times reported share prices for companies related to the private rented sector fell following the initial report.

Rent controls 'a disaster' for landlords

Reacting to the news tonight, NRLA 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.  

“Any hope of growing the market – or even retaining the homes that millions of families rely on – would be lost. 

“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.  

“Such a move would run completely counter to good economic sense and the Government’s own prior decision to rule out such measures.”

Reckless

Ben says the rumours could be the straw that breaks the camel’s back for some landlords, already hit by rising costs and increased regulation; with the new Renters’ Rights Act set to come into force on Friday. 

He said: “At a time when demand for rental housing continues to significantly outweigh supply, we agree with the Housing Minister’s view that any form of rent controls would make life more difficult for renters. 

“Even if these reports prove to be speculation, it is reckless for this kind of uncertainty to be created in the same week that major reforms already causing concern among landlords come into force.  

“For many, it may be enough to conclude that this is the moment to exit the private rented sector for good.” 

New build exemption

According to reports new build would be exempt – to encourage developers to continue building.  

The International Monetary Fund has warned the UK would suffer the sharpest growth downgrade and joint highest inflation rate in the G7 this year, even if the fallout from soaring energy costs could be contained by the middle of 2026. 

Countries cities across the globe have introduced rent controls, however the overwhelming evidence suggests that they can in fact hit those they are designed to help.  

Commenting on the issue last week Matthew Pennycook said: “There is sufficient international evidence from countries such as Sweden and Germany, and from individual cities such as San Francisco, as well as the recent Scottish experience, to attest to the potential detrimental impacts of rent controls on tenants.”

More information

• To read The Guardian article in full click here. 
• You can read more about renting and rent controls across the globe – and the impacts on p28 of  Property magazine here.

Photo credit: ©House of Commons