Private rents across England are rising sharply, prompting calls for a return to a regulated ‘fair rents’ system to protect tenants and stabilise the market. Research by the New Economics Foundation (NEF) reveals rent increases of between 6% and 9% annually in every English region, intensifying affordability challenges for low-income renters.

Rising rents a nationwide issue

The NEF describes the current surge in private rents as a ‘national phenomenon’, with the lowest income tenants now spending an average of 48.5% of their income on housing costs. This marks a significant increase compared to pre-pandemic levels, when annual rent rises ranged from around 1% in the North East to just over 3% in the east of England.

Since the pandemic, all regions have experienced rent growth between 6% and 9%, with the fastest rises occurring in north-west towns. The report attributes this trend to long-term housing policy decisions, including the abolition of rent controls in the 1980s, the sale of social housing through the right to buy scheme, and the expansion of buy-to-let mortgages.

Proposal for an emergency brake and fair rents system

To address these pressures, NEF is urging the government to introduce an ‘emergency brake’ on rent increases, limiting rises to the lower of inflation or 2%. This measure would apply both within existing tenancies and between tenancies until a more comprehensive fair rents system can be established.

The think tank advocates for a phased return to a national fair rents framework, modelled on the system that operated for much of the 20th century before its abolition. Under this approach, landlords would receive what is deemed a fair rent, while tenants would be shielded from excessive charges, balancing the interests of both parties.

Local powers and phased implementation

NEF also recommends granting mayoral combined authorities the power to declare local rent pressure zones and run pilot schemes for fair rents. These pilots would link rent levels to local indices rather than uncapped market rates, aiming to reflect regional affordability more accurately.

The report suggests a gradual roll-out of these measures in areas experiencing the steepest rent rises to avoid destabilising the rental market or causing increased tenancy turnover. New-build properties would initially be exempt from the emergency brake and fair rents system, with inclusion phased in at a later stage.

Impact on the wider economy

The report highlights that high rents not only affect tenants but also have broader economic consequences. Income transferred from renters—who tend to spend more—towards landlords—who are more likely to save or invest in assets—suppresses consumer demand. Additionally, billions of pounds in housing benefit are directed to private landlords, further entrenching this dynamic.

Public support for rent controls

Polling cited in the report indicates strong public backing for measures to control rent increases. An Ipsos MORI survey in 2024 found that 71% of respondents supported capping annual rent rises at no more than the national inflation rate, with only 8% opposed. Similarly, a YouGov survey for Common Wealth showed 75% support for rent controls linked to property quality and location.

Reviving fair rents system

NEF’s senior researcher Molly Harris emphasised the importance of affordable, secure housing for all, stating: “No matter who you are, living in an affordable, secure home is the foundation of a good life.” She acknowledged recent legislative progress with the Renters’ Rights Act but noted it does not address the issue of escalating rents.

Harris added: “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.”

What this means for landlords

For landlords, the proposed emergency brake and fair rents system would introduce new limits on rent increases, potentially affecting rental income growth. However, the aim is to create a more balanced rental market that protects tenants from excessive charges while ensuring landlords receive fair returns.

Landlords in regions with rapid rent rises may see changes implemented first, with new-build properties initially exempt from controls. The introduction of local rent pressure zones could also mean varying regulations depending on geographic area, requiring landlords to stay informed about regional policies.

Overall, these proposals signal a shift towards greater regulation in the private rented sector, reflecting growing concerns about affordability and housing security.

Source: Based on reporting from Property118

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