Rent Control, the idea that never dies

Could the Renters’ Rights Act introduce rent control by another name? 

The phrase "rent control" has a habit of resurfacing again and again, especially whenever the housing market is under stress. It’s been a regular theme here on LandlordZONE. Right now, the conditions are ripe for the discussion again as it is a major plank in the emerging Green Party’s manifesto and many Labour MPs still call for it. 

Average private rents in England rose by 8.6% in the year to July 2024, reaching 9.7% in London. Rightmove reports there are 17 households competing for every advertised rental property. Against that backdrop, is it any surprise that politicians are once again reaching for what sounds like an easy answer. 

For landlords, that should be a cause for concern. It harks back the regulation the private rented sector was under prior to the introduction of the Shorthold tenancy in 1988. This was a regime that virtually destroyed private renting in England and Wales, where rents were strictly controlled at peppercorn levels. In addition, tenants had lifetime security of tenure, even stretching to their children.

Whether rent control arrives through formal legislation or creeps in through the back door of a new Act - the Renters’ Rights Act - where tribunals hold sway, the effect could be the same.

Rent control is a deeply contentious housing policy that rests on a philosophical debate on the nature of housing—whether it is a fundamental human right or a market-driven commodity. It strikes at the heart of the landlord-tenant relationship. 

While often proposed as a quick fix for affordability issues, and to provide security for tenants against rapid rent increases, it is heavily criticised for causing long-term distortions in housing supply and market quality.

The Rent Control argument

The idea of rent control goes to the very heart of the debate about property rights, land ownership and affordability. Proponents argue that rent control, along with security of tenure, protects tenants from exploitation and ensures housing stability, in effect treating private renting as a social service. Opponents, on the other hand, including many economists, view it as an infringement on private property rights – the right to own land and property – and something that discourages investment.

From a philosophical and political viewpoint, rent control is seen as a mechanism to aid equality and equity, intended to assist lower-income households. But in practice it benefits long-term stayers, residents regardless of their incomes, rather than new tenants who often need help the most. 

With a continuing "Generation Rent" crisis in England; with high property prices, rising rents and rental scarcity, rent control is ever popular with the public and particularly parents.

A long tradition

The UK had lived with various forms of rent control since WW1, before deregulation came in the 1980s with the introduction of the Housing Act 1988. With the ability to charge market rents and regain possession relatively quickly (Section 21) people gradually began to see the financial benefits of becoming a landlord.  

That deregulation is credited with growing the private rented sector from its decimated state of below 10 per cent of households in England, to the present situation where roughly 20 per cent (one in five) of households are living in private rented homes. That’s around 11 million people now housed by something like 2.5 million landlords.

A healthy rental market  

The expansion of the PRS over the last 30 years or so is not without its critics, but the numbers speak for themselves. A well-functioning rental market attracted new investment from private individuals and firms that delivered new housing supply. Before 1988, the regulated and controlled rented sector had been contracting for decades to the point where few tenants could find rental accommodation, all because landlords found it uneconomic to stay.

Rent control is a mechanism of government intervention set to cap the price a landlord can charge. It is usually below the open market rate or quickly becomes so. It comes in many forms such as hard caps, temporary rent freezes, annual percentage limits, or "soft" controls that delay how much rents can rise from one year to the next. 

The political appeal is obvious. When tenants are squeezed as they have been of late, with rising house prices and rents, a world-wide phenomenon in fact, politicians listen to them as voters. But the economics of the situation are a different matter.

Who is calling for it now?

The loudest voices currently belong to the Green Party and the Mayor of London. The Greens’ policy has moved beyond a merely cautious argument for targeted or area controls. At its latest party conference in 2025, delegates passed a motion declaring the private rental sector as "a vehicle for wealth extraction funnelling money from renters to the landlord class" 

The resolution committed the party to effectively abolishing private landlordism, with rent controls as the first of six steps towards that goal. The other measures would ban buy-to-let mortgages, set new stringent taxation on Airbnbs and short lets, double taxation on empty properties, and give councils the first right to buy when landlords sell.

In their 2024 manifesto the Greens had called for a "Living Rent". That’s a model where median (middling) local rents would represent no more than 35 per cent the local median take-home pay. This would be enforced through rent controls, plus a two-year rent freeze in London. 

The Greens are not alone. The London Mayor has strenuously backed rent controls for the capital. A Labour-commissioned review suggested similar ideas, and polling consistently suggests that around 70 per cent of the public supports some form of rent regulation. 

A report commissioned by the Labour Party and published in May 2024 recommended the introduction of "rent stabilisation" measures, including rent caps, in England and Wales to address the soaring rental costs.

However, the Labour Party leadership distanced itself from the findings, stating that rent controls are not party policy and citing concerns over potential negative impacts on rental property availability.

Politicians of all parties though are well-aware of public opinion in the rent control direction. While the Labour government's own position is officially against formal rent control, as we now see, the Renters' Rights Act tells a more complicated story.

What the evidence actually says

Before turning to the new Act, it is worth exploring what several decades of international research tell us about rent control. The evidence has been unusually consistent for a purely economic policy question.

In August 2024, the respected Institute of Economic Affairs (IEA) published a comprehensive review of 196 studies on rent control taken over 60 years and across almost 100 countries. The author, Dr Konstantin Kholodilin of the German Institute for Economic Research, found that most studies, 56 out of 65 examined, confirmed that rent controls succeed in their stated aim of lowering rents. 

But and this is a big but, there is a very important wider picture to consider. Some studies identify that rent controls lead to higher rents outside of any controlled sector because as supply diminishes landlords seek to recover costs elsewhere. 

Others found the negative effects on overall housing supply were dramatic as fewer landlords were willing to invest and new construction stalled. Many highlighted the effect on housing quality and lack of maintenance as again landlords tried to recover or reduce their costs. 

Another effect commonly identified was one of mobility. Rent control they found reduces residential mobility as tenants cling-on to below-market rent properties they can ill afford to leave. This means they “tie-up” housing in city centres making it impossible for new renters to find accommodation, therefore having to commute long distances to work.

Rent control, according to these studies, tends to disrupt the natural allocation of housing determined by price. Perhaps a classic case would be the widow or widower remaining in a large centrally located rent-controlled house or flat long after their family has moved on, while a young working family cannot find a home near their work. 

These IEA findings are not abstractions or fiction. When Argentina's President Milei repealed rent control in 2024, rental supply in Buenos Aires jumped by 195 per cent. Landlords then came flooding back, investing in the rental market. Scotland's rent cap, in force until March 2024, produced its chilling effect on supply. In Germany and in Dublin, where rent controls are applied, it became almost impossible for new renters to find accommodation. 

The LSE and the Brookings Institution have both reached similar conclusions. Their international studies found that rent control benefits sitting tenants at the expense of new tenants, housing quality, and to the long-run supply of rental homes.

The resulting effects of rent control are not complicated; they are simple logic. Landlords behave rationally, reacting to the economic signals. If control means they lose out, they move out, its as simple as that. Tenants therefore also lose out. 

Will the Renters' Rights Act mean control by another name?

The Labour government has been clear that it does not support formal rent control. But the Renters' Rights Act 2025, which received Royal Assent in October 2025 and begins its main implementation in just over one-week, on 1 May 2026, introduces a framework for rent-setting.

Not since the late 1980s have English landlords faced such a regime, one which some property experts have dubbed rent control by the back door. 

The key changes to understand

Contractual rent review or RPI linked rent increase clauses are no longer allowed in tenancy agreements. Any similar clause in an existing tenancy agreement will be inoperative after 1 May. Rent increases in future will need to be implemented through an amended Section 13 (Housing Act 1988) procedure, regardless of what the tenancy agreement says.

Under this procedure, rent increases are limited to once per year and landlords must give two months’ notice of an increase, which must reflect the open market rent.

So far so good. In fact, many landlords don’t increase their rents on an annual basis but often allow them to fall behind with existing tenants, acting as a reward for staying longer term. Generally, landlords want to encourage tenants to stay on thereby avoiding the work, the void period, the cost involved and the risk involved when finding new tenants. So, the new regime may encourage landlords to go for 12 monthly increases, something they may not otherwise have done.

What is not so good for landlords is the second stage of this process. Tenants may challenge any proposed increase by taking it to the First-tier Tribunal. At first it was muted there would be no cost to the tenant, but now it appears tenants will pay a £47 fee to challenge a Section 13 rent increase. There will also be financial support available via the Help with Fees scheme if necessary. 

The Tribunal will determine the appropriate rent by reference to local open market values, but there’s a couple of crucial qualifiers: (1) the tribunal cannot set a rent higher than the landlord originally asked for and (2) any new rent approved can only take effect from the date of the tribunal’s determination.

Given that the tribunal system is limited in terms of its capacity to handle appeals, and the widely held expectation that it will face a significant increase in demand for rent increase appeals, delays could be substantial, effectively applying a form of unofficial rent control.

The government has acknowledged there is a risk of delays. During the Act's passage in Parliament, the Housing Minister Matthew Pennycook noted there is a compelling case for an alternative mechanism to handle rent determinations. In fact, the Secretary of State has been given extra powers to allow backdating of rent increases should a situation arise where the tribunal becomes overwhelmed. Whether those powers will be used remains to be seen.

Can this constitute rent control by another name?

Taken together, these provisions do not constitute formal rent control. The market rate remains the key reference point, so in theory rents can always revert to the market level. But in practice the effect of annual limits and a tribunal process that in-effect freezes rents during any challenge period creates a regulatory regime. 

It will deter some increases, it will add administrative complexity to what was once a straightforward market transaction, an agreement between landlord and tenant. Many small-scale landlords, those without the time and other resources to manage tribunal proceedings, will most likely fail to increase rents. 

A case to be made

Rent control has a powerful, popular and emotional appeal. When tenants are struggling and rents are rising faster than wages, often the political instinct is to cap prices. Politicians of all parties who support controls can point to polling numbers that few would ignore. And in the current climate, with the Green Party committed to abolishing private landlordism outright, and other voices pushing for local authority powers to set rents, the debate is not going away.

In the long run, should political pressure continue to build, and any future government moves towards more explicit rent controls, national caps, local authority powers, or a Scottish-style regulatory model, the consequences for rental housing supply in England could be severe. 

Landlords will most likely continue to exit the sector, especially those operating on tight margins and those with very small portfolios. These are precisely the people who between them own a significant proportion of the rental homes that lower-income tenants depend upon.

The case against rent control needs to be made, clearly, persistently, and in language that the general public and policymakers can understand. If the debate continues to drift towards rent control, the fallout will fall heaviest on those who use rental property – the tenants.

The Renters' Rights Act 2025 comes into force in phases from 1 May 2026. If they are unsure, landlords should seek professional legal and financial advice on how the changes affect them in their specific circumstances.

[Main image credit: Pavel Danllyuk]