The Chancellor is considering freezing PRS rents for one year to help combat cost of living pressures, according to reports.
The Guardian has reported that under the plans landlords would be banned from raising rents for a limited amount of time.
This move comes in response to growing concerns that inflation will once again rise to significant levels due to the impact of the Iran war.
The plans, yet to be officially confirmed, have already been condemned in the industry.
Melanie Leech CBE, chief executive at the British Property Federation, said “there is no surer way for the government to kill off its ambitions to deliver the new homes we desperately need, and the jobs and tax revenue that flow from that, than well-intentioned but inept knee-jerk government intervention”.
She urged the Chancellor to “learn the lessons of the disastrous impact of the failed attempt to introduce rent controls in Scotland with rents for new lets rising significantly after controls were introduced, alongside a standstill in new home-building.”
The National Residential Landlords Association (NRLA) has warned this would “backfire” for renters as it would undermine investor confidence and exacerbate housing supply concerns.
Ben Beadle, CEO at the NRLA, argued there is “no evidence” that would make rents more affordable.
“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,” said Ben.
“For many, it may be enough to conclude that this is the moment to exit the PRS for good.”
In agreement is Timothy Douglas, head of policy and campaigns at Propertymark, who described the reports as “alarming.”
“With the UK government introducing huge regulatory change through the Renters’ Rights Act, which will ultimately mean less flexibility and higher costs for landlords and tenants, it’s alarming to hear reports that the Chancellor is considering additional rent control measures,” said Timothy.
“If the UK government is serious about improving affordability, it must focus on increasing housing supply and supporting long-term investment in the private rented sector, rather than introducing measures that will ultimately make it harder for renters to find a home.”
There is also evidence this could clash with landlords’ current plans, ahead of the Renters Rights Act introduction.
The Landlords Trends Research Report Q1 by Pegasus Insight found that 61% of landlords were planning to raise rents this year.
This is based on interviews with 631 landlords in March and April.
“Landlords are not setting rents in a vacuum,” said Mark Long, founder and managing director at Pegasus Insight.
“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.”
BTL Insider has contacted HM Treasury for comment.
