Non-public renters need price aid now: their lease is simply too excessive. New housebuilding — significantly of social housing — will assist in the long term, but it surely won’t repair affordability challenges in a single day. Speedy motion is required.
This NEF working paper analyses at the 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 international locations: affordability crises have occurred earlier than, and policymakers have realized easy methods to sort out 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 lease 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 goal of making a worthwhile landlord enterprise mannequin the place it didn’t exist earlier than, however at a excessive price to the residing requirements of England’s 4.6 million personal renting households.
Coverage adjustments within the Nineteen Eighties that raised prices within the PRS have been adopted within the Nineteen Nineties by adjustments in lending coverage within the banking sector. Constructing on credit score liberalisation within the Nineteen Eighties and the Housing Act 1988, this enabled landlords to entry the fast-rising pool of financial institution credit score by way of buy-to-let mortgages, launched in September 1996. This marked the second the PRS started to double in measurement, 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. “Technology lease” had been born.
The passage of the landmark Renters’ Rights Act in 2025 marked a serious step in 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 presents of above-advertised lease. However additional motion is required if personal rents are actually 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 via the £39bn social and inexpensive properties 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 basically improves safety of tenure, and begins tackling landlords’ monopoly energy, which permits them to extract shortage rents. We suggest an “emergency brake” on lease rises, which permits time for brand spanking new residence 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 focus on a spread of routes to realize this.
- Investing within the enforcement of current rules within the PRS, significantly 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 will not be transformed or offered to turn into short-term vacation lets or second properties or to take a seat empty.
- Instituting tax reforms to scale back distortions that favour residential property funding, notably across the nationwide insurance coverage therapy of rental earnings.
The largest 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 lease controls however studying from the very best fashionable examples round Europe to construct an entirely new system. Our proposed design combines an emergency brake, which could possibly be applied shortly, to deal with widespread experiences of the cost-of-living disaster, with an iterative and evidence-led transition to a long-term system of lease regulation.
To rebuild a system of truthful rents, we suggest the next:
- Instantly implement an emergency brake on annual lease rises for PRS tenants. Rents can rise by the decrease of shopper costs index (CPI) for the earlier monetary 12 months or a set cap (we suggest 2%). This is able to apply to lease 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 elevate 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 (resembling Scotland’s 2022 lease freeze) present the risks of time-limited lease 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 knowledge on properties. Gathering acceptable information is the vital basis for the success of any additional lease regulation. Most essential could be to seize rental costs every year, however the authorities might seek the advice of on capturing wider information, resembling property high quality, efficiency in opposition to the first rate properties commonplace power efficiency certificates (EPC) ranking.
- Create and delegate new powers to native leaders to declare truthful rents pilots, the proof base for which might be primarily based on current Workplace for Nationwide Statistics (ONS) statistics on personal rents, plus information 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 via a long-term, phased course of that steadily converges current rents with lease ranges which might be genuinely truthful for personal renters. How this phased course of is applied could be a vital component of additional coverage design. It will should be accompanied by detailed information assortment to offer early warning of any antagonistic results from the coverage. Equally, sure exemptions might apply, for instance, landlords with portfolios underneath a sure measurement or with particular mortgage encumbrances.
- Exempt new-build properties for a interval from the emergency brake and truthful rents programs. After that interval, dwellings would part steadily into the primary truthful rents system.
- Preserve the nationwide emergency brake in place till the top of the testing interval and the nationwide implementation of a good rents system. That is to forestall lease will increase in buffer zones bordering pilot areas for truthful rents; stabilise pressures in different high-cost areas which were 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 worth regulation for personal rents: for instance, Ipsos MORI present in 2024 that 71% of the general public supported capping annual lease rises at not more than the nationwide inflation fee (versus 8% opposing). YouGov polling for Widespread Wealth in 2024 likewise discovered 75% public help for a lease controls coverage that’s particularly high quality and site linked (versus 15% opposition). Lease affordability has turn into much more salient within the years for the reason that Covid-19 pandemic, after a number of years of dramatic lease 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 lease 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 standard coverage of ready for brand spanking new housing provide to carry down rental costs. A well-designed lease controls coverage enhances the development of latest dwellings and needs to be applied alongside accelerated efforts to construct new dwellings, significantly for social lease.
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