Renters are now seeing increases of between 6% and 9% each year, according to NEF research published today.

The report reveals that the lowest income renters are spending just under half their income (48.5%) on rent, and warns that, without further action, affordability will continue to worsen across the country.

The research argues that the Renters’ Rights Act, which came into force this month, was a vital step forward in protecting tenants from unfair evictions and other abuses.

However, it will not solve the issue of unaffordable rents by itself, the NEF went on.

The proposals call for an ​’emergency brake’ capping rent increases at the lower of inflation or 2%, paired with a return to a system of ​’fair rents’, used throughout the 20th century until they were abolished in the 1980s.

The policy worked on the principle that landlords should receive fair rental income, and in return should not exploit renters through charging excessive rents.

NEF senior researcher Molly Harris said: “No matter who you are, living in an affordable, secure home is the foundation of a good life. But private renters are often pushed into overpriced and substandard homes.

“The Renters’ Rights Act is a valuable step forward in making private renting safer and fairer – but it doesn’t address the UK’s problem of runaway rents.

“Reviving a proven system that was in place for over 70 years, but redesigned for the 21st century, would make life more affordable for private renters across the whole country.”

Before the pandemic, rent rises were modest and varied across the country, from around 1% in the north-east to over 3% in the east of England.

Since then, the picture has changed dramatically with all regions growing between 6 – 9%, and the top three fastest-growing rental markets all in north-west towns.

The report argues that decades of policy choices, including the removal of rent controls, the sale of social homes through Right to Buy and the introduction of buy-to-let mortgages has worsened housing affordability in every region of the UK.

Meanwhile, the consequences are being felt across the economy, the NEF said. High rents transfer income from renters, who are more likely to spend, to landlords, who are more likely to save or reinvest in assets. This supresses consumer demand and channels billions in housing benefit to private landlords.

The NEF paper proposes a comprehensive programme of reform, combining immediate action with a longer-term structural framework:

• An immediate ​’emergency brake’ on runaway rents until a fair rents system has been established. This would temporarily introduce a limit on rent rises both within and between tenancies by either inflation rates or 2%, whichever is lower

• New powers for mayoral combined authorities to declare local rent pressure and run ​’fair rent’ pilots, with rent levels set by reference to local indices rather than uncapped market rents

• A gradual implementation of fair rents in areas of the country with runaway rents through a long-term phased process to avoid rent crashes or excessive churn in tenancies

• An exemption for new-build properties from the emergency brake and fair-rent system for a period, and then gradually phase them into the fair-rent system

The proposals draw on international evidence, including from France, Germany, Ireland and Spain, all of which operate rent regulation systems. Rent controls in Paris, for example, have seen rents decrease by 3.7% to 4.2% on average, with no evidence of negative effects on rental market supply, the NEF said.

Public opinion is strongly in favour of action on rent controls. Polling by Ipsos MORI in 2024 found that 71% of the public supported capping annual rent rises at no more than the national inflation rate, while just 8% opposed. A separate YouGov survey for Common Wealth found 75% support for a quality and location-linked rent controls policy.