Emergency brake needed on ‘runaway’ rent rises, experts warn
Ministers have been warned that new housing laws will not go far enough in tackling affordability, while the working class has been urged to take immediate action to combat rising rents.
Leakage rents are a “national phenomenon” and are rising by between 6 and 9 per cent each year in every part of England, according to a new report from the New Economics Foundation (NEF).
These steady increases above inflation cause the lowest-income renters to spend just under half (48.5 percent) of their income on rent, the researchers add.
Labor’s Tenant Bill of Rights, which came into force this month, made sweeping changes to the rental system, including removing Section 21 eviction notices, ending fixed-term contracts and capping rent on advance demands.
NEF said these were welcome safety-improving measures but argued the government needed to go further in improving renters’ affordability.
Its report calls on Labor to impose an “emergency brake” to limit rent increases to the lowest level of inflation, or two per cent. This triple lock-like measure would usher in a sector-wide ‘fair rent’ policy that would see a complete end to excessive rent increases, mirroring a policy that was in force in England until the 1980s.
NEF senior researcher Molly Harris said: “No matter who you are, living in an affordable, safe home is the foundation of a good life. But private tenants are often pushed into overpriced and substandard homes.
“Reviving a proven system that has been in place for over 70 years but reimagined for the 21st century will make life more affordable for private tenants across the country.”
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Under current law, tenants can challenge above-market rent increases by appealing to the court. Labour’s reforms gave more tenants the ability to benefit and capped rent increases at once a year. However, no rent caps or controls were introduced as part of the bill.
Following recent speculation that Labor ministers were considering these policies, housing minister Matthew Pennycook said: “We are not doing that. This is not a credible or serious policy proposal.”
“I don’t remember how many times I’ve said that this government has no intention of accepting rent controls and there are really good reasons for that.”
The NEF report also called for:
- New mayoral powers were given to unified authorities to declare local rent pressures and run “fair rent” pilots, where rent levels are set according to local indices rather than unrestricted market rents.
- Phasing in fair rents through a long-term phased process in parts of the country where there are leakage rents to prevent rent collapses or excessive volatility in tenancies
- Emergency brake for newly built properties and exemption from the fair rent system for a period of time, then gradual transition to the fair rent system
Responding to the proposals, Tom Copley, London’s deputy mayor for housing, said: “I welcome this report – London needs rent stabilization to help make renting more affordable.
“The Tenants’ Bill of Rights is a vital and transformative step in the right direction, and the mayor’s long-standing belief is that ministers must devolve the power to cap rent rises so we can tackle these problems in the capital. The evidence is clear that Londoners will overwhelmingly support new plans to cap rent rises.”
The report comes as the government is called to take action on rising rents. Research published on the same day by the Joseph Rowntree Foundation and the Autonomy Institute found that the majority of British homeowners achieved higher returns than similar benchmark investments; this rate was 74 percent in 2018, 99 percent in 2021 and 63 percent in 2024.
The joint report said introducing rent control, which caps tenancy rent increases at inflation rent and caps at that level plus 2 per cent between tenancy increases, could save tenants an average of £1,200 a year over six years.
A spokesperson for the Department of Housing, Communities and Local Government commented: “The Tenants’ Rights Bill delivers the biggest reforms to renting in 40 years, protecting private tenants from rogue landlords, financial exploitation and eviction without cause.
“This law already stops rent rising more than once a year, gives tenants the power to oppose increases above market rate, and bans rent bidding wars.
“The one-month advance rent cap is also now in place, so no one needs to pay significant sums just to secure a tenancy.”
