Non-public renters need value aid now: their hire is just too excessive. New housebuilding — notably of social housing — will assist in the long term, nevertheless it is not going to repair affordability challenges in a single day. Rapid motion is required.
This NEF working paper analyses right this moment’s affordability disaster within the private-rented sector (PRS), and the wide selection of things driving it. Its emphasis is on studying from historical past and from different nations: affordability crises have occurred earlier than, and policymakers have discovered learn how to deal with them efficiently. The place coverage has gone fallacious over the previous technology is in going too far in eradicating safety of housing tenure for renters, and in eradicating all rules on hire costs – each of which occurred within the Housing Act 1988, in its quest to construct an investable asset class for landlords. The elimination of those rules achieved its coverage purpose of making a worthwhile landlord enterprise mannequin the place it didn’t exist earlier than, however at a excessive value to the dwelling requirements of England’s 4.6 million personal renting households.
Coverage modifications within the Eighties that raised prices within the PRS have been adopted within the Nineteen Nineties by modifications in lending coverage within the banking sector. Constructing on credit score liberalisation within the Eighties and the Housing Act 1988, this enabled landlords to entry the fast-rising pool of financial institution credit score through buy-to-let mortgages, launched in September 1996. This marked the second the PRS started to double in dimension, extending the attain of its low-security, high-cost tenure mannequin from 10% of English households in 2000 to 18% by 2012‒13 after which 20.3% by 2016‒17. “Era hire” had been born.
The passage of the landmark Renters’ Rights Act in 2025 marked a serious step in the direction of reining within the excesses of the period of contemporary landlordism, abolishing part 21 “no-fault” evictions to revive a measure of safety of tenure for renters and bringing in essential controls like bans on landlords accepting gives of above-advertised hire. However additional motion is required if personal rents are really to be made inexpensive within the twenty first century.
We suggest a holistic programme of emergency housing affordability measures, in recognition that no single coverage will clear up the issue of structurally excessive rents. These measures ought to sit alongside the federal government’s wider programme to advertise housebuilding, together with by means of the £39bn social and inexpensive houses programme (SAHP) and reforms to the nationwide planning coverage framework:
- Repealing probably the most damaging elements of the Housing Act 1988, constructing on the Renters’ Rights Act 2025 that essentially improves safety of tenure, and begins tackling landlords’ monopoly energy, which permits them to extract shortage rents. We suggest an “emergency brake” on hire rises, which permits time for brand new dwelling building to enhance affordability, and to construct a longer-term new system for truthful rents.
- Constructing a social and group acquisition programme, supporting an orderly shrinkage of the PRS by granting proper of first refusal and scaling up acquisition capability for native authorities, group organisations, and housing associations. We talk about a spread of routes to realize this.
- Investing within the enforcement of present rules within the PRS, notably to enhance the capability of housing tribunals to swiftly treatment disputes between landlords and tenants. Planning and licensing enforcement capability may even should be scaled up to make sure that PRS dwellings usually are not transformed or offered to turn out to be short-term vacation lets or second houses or to sit down empty.
- Instituting tax reforms to scale back distortions that favour residential property funding, notably across the nationwide insurance coverage remedy of rental earnings.
The most important innovation in our programme is a proposal to construct a brand new nationwide system of truthful rents, impressed by the title of England’s Twentieth-century hire controls however studying from the most effective trendy examples round Europe to construct an entirely new system. Our proposed design combines an emergency brake, which may very well be carried out shortly, to handle widespread experiences of the cost-of-living disaster, with an iterative and evidence-led transition to a long-term system of hire regulation.
To rebuild a system of truthful rents, we suggest the next:
- Instantly implement an emergency brake on annual hire rises for PRS tenants. Rents can rise by the decrease of client costs index (CPI) for the earlier monetary 12 months or a set cap (we suggest 2%). This is able to apply to hire will increase for all tenancies, together with between tenancies, in order that rents wouldn’t reset to the unregulated market degree. For this programme to achieve success, it should keep away from “emptiness deregulate” the place landlords increase rents considerably between tenancies. The coverage wouldn’t be everlasting, however ought to final till a longer-term truthful rents programme is in place: examples from elsewhere (equivalent to Scotland’s 2022 hire freeze) present the hazards of time-limited hire freezes inflicting market instability when they’re ended or prolonged.
- Lengthen the scope of the brand new PRS database created by the Renters’ Rights Act 2025 so it collects a wider vary of information on properties. Accumulating acceptable knowledge is the important basis for the success of any additional hire regulation. Most vital could be to seize rental costs annually, however the authorities might seek the advice of on capturing wider knowledge, equivalent to property high quality, efficiency in opposition to the first rate houses normal vitality efficiency certificates (EPC) score.
- Create and delegate new powers to native leaders to declare truthful rents pilots, the proof base for which might be primarily based on present Workplace for Nationwide Statistics (ONS) statistics on personal rents, plus knowledge on native labour markets and from the expanded PRS database. We envisage mayoral mixed authorities being the suitable degree of presidency to have this energy.
- Studying from truthful rents pilots, design and implement a nationwide truthful rents system by means of a long-term, phased course of that steadily converges present rents with hire ranges which can be genuinely truthful for personal renters. How this phased course of is carried out could be a vital factor of additional coverage design. It might should be accompanied by detailed knowledge assortment to supply early warning of any antagonistic results from the coverage. Equally, sure exemptions might apply, for instance, landlords with portfolios beneath a sure dimension or with particular mortgage encumbrances.
- Exempt new-build properties for a interval from the emergency brake and truthful rents techniques. After that interval, dwellings would part steadily into the principle truthful rents system.
- Preserve the nationwide emergency brake in place till the tip of the testing interval and the nationwide implementation of a good rents system. That is to forestall hire will increase in buffer zones bordering pilot areas for truthful rents; stabilise pressures in different high-cost areas which have been highlighted in quantitative affordability findings; and supply a vital backstop to forestall distortions, together with mass evictions.
Public opinion is constantly in favour of stronger value regulation for personal rents: for instance, Ipsos MORI present in 2024 that 71% of the general public supported capping annual hire rises at not more than the nationwide inflation fee (versus 8% opposing). YouGov polling for Widespread Wealth in 2024 likewise discovered 75% public assist for a hire controls coverage that’s particularly high quality and site linked (versus 15% opposition). Lease affordability has turn out to be much more salient within the years because the Covid-19 pandemic, after a number of years of dramatic hire rises, as mentioned on this paper. The extent of regional variation in development fee has additionally narrowed: each area now grows at between 6% and 9% per 12 months, suggesting that rental unaffordability is a nationwide phenomenon.
A well-designed and holistic hire controls coverage would give policymakers an appropriately highly effective device to redress the acute affordability disaster within the PRS, and to take action over a a lot shorter timeframe than the same old coverage of ready for brand new housing provide to deliver down rental costs. A well-designed hire controls coverage enhances the development of latest dwellings and must be carried out alongside accelerated efforts to construct new dwellings, notably for social hire.
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