Chancellor Rachel Reeves has proposed to introduce a one-year rent freeze on private sector homes.
The proposals, first reported in The Guardian, would see landlords in England banned from raising rents for a 12-month period.
National Residential Landlords Association <a href=”https://www.mortgagestrategy.co.uk/news/nrla-calls-on-govt-to-tackle-growing-costs-in-the-rental-market/”>(NRLA)</a> chief executive Ben Beadles says the rent freeze would “be a disaster for landlord and investor confidence and consequently the supply of homes in England”.
Beadle explains: “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.”
The rent freeze is being put forward as part of a broader package to tackle rising bills across the board, which are due to be launched in the coming weeks.
This comes after housing minister Matthew Pennycook said on 13 April: “The Government do not support the introduction of rent controls, which we believe could make life more difficult for renters.”
“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.”
Beadle adds: “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.”
Also commenting, Pegasus Insight founder and managing director Mark Long says: “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.”
“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.”