Speculation over possible rent controls under Prime Minister Andy Burnham risks damaging confidence among housing investors, property advisers have warned.
Burnham said earlier this week that his government was considering proposals including a temporary rent freeze as part of measures to address the cost-of-living crisis. However, the Financial Times has subsequently reported that rent controls have been ruled out.
Lauder Teacher Associates says the period of uncertainty could nevertheless affect investment decisions, particularly in the build-to-rent sector, where projected rental income is central to determining whether developments are financially viable.
The consultancy also argues that official statistics present a more complicated picture of rental affordability than some of the political debate suggests.
MIXED AFFORDABILITY PICTURE
The latest English Housing Survey found that 68% of private renters considered meeting their housing costs fairly or very easy during 2024-25.
However, 32% said paying their rent was fairly or very difficult, an increase from 27% in 2019-20. The figures therefore show that most tenants are managing their payments, but affordability pressures have increased for a sizeable minority.
Separate Office for National Statistics figures show regular earnings across Great Britain grew by 3.4% in the three months to May.
That was marginally ahead of the 3.3% annual increase in UK private rents recorded in May, while London rents rose by 2%. However, regular private-sector pay increased by only 2.9%, demonstrating that the relationship between earnings and rents varies between workers and regions.
Andrew Teacher, Founding Partner of Lauder Teacher Associates, says: “A rent freeze pretends to solve an affordability problem by worsening the bigger problem we face: getting investors to the table.
“If we want to deliver new homes and generate economic growth, investment is critical. Rent caps sound great on a radio interview, but the recent data shows the damage they can create for no lasting political or economic gain.
“Whilst nothing had been ruled out, the constant yo-yo of uncertainty is itself damaging and enough to spook investors.”
SUPPLY PRESSURES
The warning comes as housing delivery remains below its recent peak. England recorded 208,600 net additional homes during 2024-25, down 6% annually and 16% below the 248,590 recorded in 2019-20.
The Home Builders Federation has also estimated that inflation, regulation, taxation and other development costs have collectively added approximately £76,000 to the cost of delivering a new home since 2020.
Colm Lauder, Founding Partner of Lauder Teacher Associates, says uncertainty over future rental income could make investors less willing to finance additional supply.
“We all agree there’s a housing crisis and that the Treasury alone cannot fund its way out of that crisis.
“A lack of new capital means supply fails to grow with demand and rents rise. Where is the sense in pricing out the investors whose cash we need to help fix things?”
International research suggests rent controls can benefit tenants who remain in protected properties, but may produce wider market consequences.
A major study of rent control in San Francisco found that covered tenants were more likely to remain in their homes, while landlords reduced rental housing supply by 15%.
Lauder Teacher says ministers should provide an unequivocal statement on rental policy and concentrate on planning reform, development viability and increasing housing supply.
