If there’s one topic that’s guaranteed to come round every few months, its rent controls. The latest incarnation has been on the back of Andy Burnham’s ascension to the role of Prime Minister and his promise to tackle cost of living. 

Fortunately, Labour has taken steps to distance itself from rent control, and for good reason. 

But it’s only a matter of time before it circles back round on the news agenda as yet another think tank states that it’s a good idea or a politician wants to garner a headline. 

I fundamentally believe rent controls are a mistake. They distort a market and they deter investment. Where rent controls have been implemented in the past, it has proved counter-productive, with less choice for tenants.

Let’s look at the hard economics of it. Rental inflation as measured by the ONS it has returned to its long-term correlation with wage inflation and is not too far off the Consumer Price Index at 3.3% in June, so why are controls necessary? 

Yes, there was a strong rental inflationary reaction between 2022 and 2024 due to a toxic mix of unprecedented demand for rental property in the wake of the Covid lockdowns and the post mini-budget price surge, but the market has subsequently corrected itself. 

Second, we have just had some of the most fundamental changes introduced to the rental market for four decades through the Renters’ Rights Act, including…guess what…rent control by proxy in the form of the rent tribunal service, which can challenge what it deems to be above market rents. 

Now, if there’s one thing that I’ve been asking landlords to do for some time is to be more consistent with their rent reviews and to build in annual increases in line with inflation.

Data from Pegasus’ Landlord Panel shows that only 65% of landlords increased rent in the past 12 months, with 61% intending to increase rents over the next 12 months. How many other businesses don’t build at least inflation-related cost increases into their model? 

But landlords are humans and sometimes humans don’t make rational decisions. Landlords develop a good relationship with their tenant, so they don’t increase the rent. Their tenant may be going through a tough time, so they don’t increase the rent. They are happy with the income they are getting, so they don’t increase the rent. 

Of those that are intending to increase rents, 72% say it’s to cover the increased costs of running a property, 67% to bring it more in line with local market rents and 59% to factor in tax increases announced in the last Budget. Just under half say its to adjust rent in line with inflation and just 39% say that it will be a scheduled annual increase. 

So clearly, landlords who do increase rents, do so for a reason. It’s not some rabid obsession with eeking every last penny out of tenants. 

If the Government really wants to help those in rental accommodation on lower incomes, it should look at unfreezing the Local Housing Allowance. While Local Housing Allowance rates were increased in 2024, they have since been frozen, meaning support has not kept pace with further rental inflation in many parts of the country.

They could also relaunch a Help to Buy style scheme to move more people into home ownership. 

But these measures cost money and there’s not a lot of that spare at the moment. Landlords are an easier target, as we have seen many times before, but let’s consider the unintended long-term consequences of introducing these measures the next time the idea of rent control is trotted out. 

Louisa Sedgwick is Managing Director of Mortgages at Paragon Bank