The research found that the government could redesign the tax system to make it fairer and make rents more affordable without jeopardising the private rented sector.

Most English landlords recorded higher returns compared to similar benchmark investments, even after tax (74% in 2018, 99% in 2021 and 63% in 2024), the Autonomy Institute found.

Introducing a rent control that caps rent increases in-tenancy at CPI and caps between tenancy increases at CPI+2% could save renters almost £1,200 per year on average within six years, the research found.

Restoring full mortgage interest relief would protect the landlords most impacted by a rent control and higher mortgage rates.

Applying NICs to rental income would capture inordinate profits and stop landlords who are profiting the most paying the least tax on those profits, according to the study.

Introducing the proposed tax changes would lead to fewer landlords making a loss by 2030, even with a rent control, JRF said, than if the current tax system remained.

The charity said this would improve the stability of the sector and better protect the supply of rental homes.

A rent control would also make the Housing Benefit bill more sustainable, funding the annual uprating of Local Housing Allowance back to the 30th percentile of local rents, while also delivering more than £600 million in net savings by 2030, JRF said.

Recent rent inflation, around 8% since the last general election in July 2024, has only added to the pressure renters were already under.

A rent control would help ease the pressure on renters, particularly as the benefits of building more homes will take time to be felt, JRF said.

JRF’s conclusions are underpinned by research by the Autonomy Institute, which found that, while renters are being squeezed, landlords in England are recording significant overall profits.

The research analysed how well English landlords’ investments have performed since 2018, assessing landlords’ rental income and capital gains, as well as estimating landlords’ operating, financing and tax costs. Landlords’ profits on their investments were then compared to benchmark profits from similar investments.

In each of the three years studied as part of the research, the majority of English landlords recorded higher profits compared to similar benchmark investments, even after tax (74% in 2018, 99% in 2021 and 63% in 2024).

While most landlords are experiencing exceptional profits, some landlords are faring better than others due to how they are taxed. Currently the tax system exacerbates the risk of mortgaged landlords making a loss, due to Section 24 restricting tax relief on mortgage interest.

Landlords who own outright without a mortgage, who the Autonomy Institute’s research shows are making the highest returns, are taxed lightly on their profits in comparison.

The Autonomy Institute said this should be changed to end the imbalances within our tax system, while also smoothing the impact of a rent control for highly leveraged mortgaged landlords who would be most at risk of losses.

JRF have modelled the impact of reversing Section 24 and applying National Insurance Contributions (NICs) to rental income in combination with a rent control that caps in-tenancy rent increases to CPI and between tenancy increases to CPI + 2%.

JRF found this could save renting households almost £1,200 per year on average within six years.

JRF found that introducing the proposed tax changes would lead to fewer landlords making a loss by 2030 even with a rent control than if the current tax system remained. Introducing a rent control in this way would therefore not be expected to jeopardise the supply of existing rental homes. The cost of offering a relief to mortgaged landlords would be entirely paid for by applying NICs to rental income.

In a report later this year JRF will outline how a rent control could work in practice.

JRF senior policy adviser Rosie Worsdale said: “Renters have felt the squeeze of unaffordable rents that take up too high a proportion of their incomes for far too long. Trapped in a cycle of high rents, financial strain and no ability to save – renters are just one redundancy or illness away from a crisis. They can’t wait for the many years it will take to feel the impact of the new homes currently being built.

“By contrast, most landlords have experienced inordinate profits since 2018. However, our tax system means that the landlords profiting the most pay the least tax on their profits. What’s needed is a solution that eases the rent squeeze for renters without unintended consequences that could jeopardise the private rented sector.

“Targeted tax reforms would capture the extraordinary profits landlords have experienced and tax all income from rents more fairly, while also protecting the most exposed landlords. Together this would create the conditions where rents could be capped, easing the squeeze on renters, without detrimental consequences.”