Rent controls limit the amount of rent a tenant can be charged, generally by putting a freeze or cap on rent increases.
While these controls exist in the social housing sector, there is currently no such limit on private rents – however, it’s a topic that does come up periodically, which has been brought into the spotlight in the years since the pandemic, due to affordability concerns and record-breaking rent rises in much of the UK. So what does rent control mean for a landlord's bottom line?
In Scotland, where a rent cap has been in place, the price increases for new lets and re-lets shows that landlords were still able to protect their profit margins from the high rate of inflation when one tenancy ended and a new one began.
This is evidence that in-tenancy rent control simply creates a two-tier market and tends to discourage tenants from moving, which only limits the supply of available stock, putting further upward pressure on new rents.
As it currently stands, if a tenant is concerned about the level of a proposed rent increase, they can apply to a rent officer at the First-tier Tribunal (if applicable), for a rent adjudication. However, given that the marketplace generally dictates what level of rent is ‘reasonable’, it remains to be seen how many of these adjudications are favourable to tenants.
New rent controls being proposed around the UK
In July 2022 a commission was launched in Bristol to look at how the PRS in the city could be improved, with the final report suggesting that if a rent control policy were to be pursued, annual rent caps could be set at 5% per year, with increases between tenancies of not more than 10% above the current market average.
And rent control measures are also being considered in Wales, where a government consultation ran from June to September last year.
The measures being explored were a rent ceiling, a rent freeze, limiting annual rises to a certain percentage, and only allowing rent increases between tenancies when one tenant moves out and the property is freshly advertised.
However, industry leaders, agents and landlords are broadly opposed to rent controls. Ben Beadle, Chief Executive of the NRLA, believes introducing these measures in Wales would only serve to “decimate the sector further”, saying it would be a disaster for tenants, many of whom are already struggling to find accommodation.
He believes that the best way to control rents and reduce costs for renters is to introduce pro-growth measures that would increase housing supply across the board.
Propertymark’s Timothy Douglas is in agreement:
If you would like to discuss the current rent on your property and how much it may be able to achieve for an upcoming rent review or re-let, we’re always here to help. Just get in touch with your local branch and one of our local lettings experts will be happy to have a chat.
The Reeds Rains Content Marketing Team
