Renters’ Reform Coalition urges next prime minister to introduce rent caps

As the political landscape in Westminster shifts, a coalition of 18 housing charities and renters’ unions has issued a stark warning to the incoming leadership: failure to address private rental costs will render broader efforts to manage the cost of living ineffective. The Renters’ Reform Coalition (RRC) argues that without direct intervention in the housing market, the government’s attempts to ease financial pressures on households will be akin to trying to fill a leaking bucket, according to RRC director Clara Collingwood.

This intervention arrives at a pivotal moment, as Andy Burnham prepares to transition into Downing Street following the tenure of Sir Keir Starmer. While Burnham has yet to formalize his domestic agenda, he is a known proponent of market intervention, having previously signed an open letter in 2023 calling for an immediate freeze on rents.

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The Case for Market Intervention

The RRC’s primary contention is that rental growth has consistently outpaced wage growth, noting that this trend has persisted in 11 of the past 15 years. Supporters of rent controls, including the Joseph Rowntree Foundation and the New Economics Foundation, argue that such measures are no longer radical but necessary to stem rising poverty and homelessness. Their analysis suggests that a rent cap could lead to significant financial improvements for tenants within a four-year period, while simultaneously reducing the government’s long-term housing benefit expenditure.

Proposals currently circulating among policymakers vary in their mechanisms:

• The Joseph Rowntree Foundation: Models a cap aligned with the Consumer Price Index (CPI) within tenancies, and CPI plus 2% for transitions between tenancies.
• Institute for Public Policy Research: Proposes a double lock system, limiting annual increases to whichever figure is lower: inflation or wage growth.
• New Economics Foundation: Advocates for an emergency brake on rent rises, pegged to the lower of inflation or CPI plus 2%.
• Baron Blunkett: Previously suggested a retrospective, temporary 12-month rent control measure linked to inflation.

Beyond the RRC, voices within the Labour party are increasingly echoing these calls. Margaret Mullane, MP for Dagenham and Rainham, recently argued that the current trajectory is pushing councils toward financial crisis and that the welfare budget is under immense strain due to high private rents. She noted that current policy must go further to protect renters.

Economic Constraints and Future Risks

While the pressure for reform mounts, the incoming government faces a constrained economic reality. The UK government currently spends more than £110 billion annually just to service national debt, a sum that eclipses the national budget for schools.

The economic environment remains fragile. Inflation, initially stoked by post-pandemic supply chain issues and exacerbated by energy costs following the war in Ukraine, has left many households struggling with the price of essentials. Data indicates that food costs in 2023 rose by 25% and have remained elevated. Projections suggest that household disposable incomes may be £740 lower by the 2029/30 period compared to the 2024/25 levels.

Burnham’s administration will also be subject to external pressures beyond his direct control. The stability of international markets—specifically regarding energy costs and supply chains affected by tensions in the Middle East—remains a critical variable.

What to Watch Next

• Devolution Plans: Burnham has signaled an interest in granting local authorities greater economic powers, though experts warn that implementing such structural changes will require significant time.
• Economic Indicators: Any resurgence in energy costs or global supply chain disruption will likely be blamed on the new Prime Minister, regardless of his control over American foreign policy or international trade.

For now, the RRC maintains that the current, unchecked rise in rental costs is a national phenomenon that impacts the entire economy, not just those who rent.