Downing Street has ruled out a rent freeze just hours after Chancellor Rachel Reeves refused to distance herself from the policy during a Commons session, sparking a wave of panic among residential landlords and economists.
Reeves Stoked Rumours in Commons
On Tuesday, Chancellor Rachel Reeves fuelled rumours that she was considering banning private rent hikes for a year. When asked by Labour MP Yuan Yang whether she would impose a rent freeze, Reeves declined to rule out the policy, stating: "I will do everything in my power and use every lever we have to bear down on the cost of living, including for people in the private rented sector."
However, hours later, a Downing Street spokesperson clarified: "We have no plans to implement this."
Market Reaction and Criticism
The rumours knocked the share prices of multiple FTSE-listed buy-to-let mortgage lenders. OSB Group, one of the country's largest buy-to-let mortgage providers, saw its shares fall 3.6 per cent, while Paragon Banking Group slipped 2.4 per cent.
Economists and landlords widely panned the proposed policy. Robert Colvile, head of the Centre for Policy Studies think tank, described it as a "mind-boggling scale of intervention in the private market." He warned that rent controls in England had previously led to a decline in rental stock and urban depopulation, as landlords lacked incentives to maintain or renovate properties.
Melanie Leech, chief executive of the British Property Federation, said: "We recognise the current pressures on individuals and households, but there is no surer way for the Government to kill off its ambitions to deliver the new homes we desperately need than well-intentioned but inept knee-jerk Government intervention."
Government Backtrack
The government moved quickly to quell the speculation. A Downing Street spokesperson reiterated: "Just to be completely clear, that is not the approach we will be taking."
The National Residential Landlords Association criticised the government's apparent kite flying, stating: "It is reckless for this kind of uncertainty to be created in the same week that major reforms already causing concern among landlords come into force. For many, it may be enough to conclude that this is the moment to exit the private rented sector for good."
Previous Stance on Rent Controls
Housing minister Matthew Pennycook had previously stated Labour's opposition to rent controls, resisting Green Party calls for their introduction. Earlier this month, he said: "The government do not support the introduction of rent controls, which we believe could make life more difficult for renters. There is sufficient international evidence from countries such as Sweden and Germany, and from individual cities such as San Francisco, as well as the recent Scottish experience, to attest to the potential detrimental impacts of rent controls on tenants."
The brief flirtation with a rent freeze has highlighted the delicate balance the government must strike between addressing cost-of-living pressures and maintaining investor confidence in the housing market.
