Stabilising rents in England: why and how we should limit rent rises

Tarun Bhakta, Shelter Policy Manger

The conversation in England about rent controls is a mess. Very often you will hear 'rent controls don’t work' as a throw away comment, often without any evidence - and that throwaway comment is used to dismiss any kind of regulation of rents.

One of the most frustrating things about this take is that it’s far too simple.

There are hundreds of different types of rent controls - ranging from ‘rent freezes’ to ‘rent pressure zones’ to ‘rent stabilisation’. And to say that they simply 'don’t work' ignores the fact that many countries across Europe are operating some form of rent control. In fact, regulating rents is totally normal. In many places it’s a fundamental element of living in a secure, stable rental system. Something we really really lack in England. Shelter is calling on all parties to commit to security and stability for renters. To prevent renters being forced out their homes by extortionate rent hikes, the next government should set fair and sensible limits on in-tenancy rent increases. In this short series, we’re going to set out the case for regulating rent increases in England, and share what we’ve learnt from how it works in other countries.

The case for stabilising rents

The private rented sector in England is expensive and unpredictable. With a dire lack of social homes, more and more people rely on the sector for a permanent home, and demand for rental homes has grown. Landlords are increasingly able to cash in on competition for homes by hiking up the rent. According to a recent Shelter/YouGov survey, one third of renters are paying 50% or more of their income on their rent. Well beyond the 30% that is the accepted upper limit of ‘affordable’. Throw in crises like the pandemic or the ballooning cost of living, and things can get out of hand very quickly. Over the last year, rents have soared. Average annual rent increases in England peaked at 9.1% in March 2024 – the equivalent of an extra ￡107 a month that renters must find, or risk losing their homes. Record rent rises on top of already unaffordable rents is a disastrous combination. Renters are finding themselves pushed to the brink, cutting back on essentials daily or being forced into homelessness because they simply can’t afford the increase. Because for many, a rent increase is as good as an eviction. Three in 10 (29%) say they could not afford any rent increase at all. A further 24% say they would be unable to afford any rent increase without cutting back on essential spending, becoming behind on bills or needing to borrow money. We’ve seen commitments across the political spectrum in England to scrap unfair, ‘no fault’ evictions. But all of this will be undermined if landlords are free to bump up tenants’ rents and force them out their homes through the back door. And in England, protections against large rent increases are paper thin.

What are the rules around rent increases now?

For tenants on a ‘rolling’ or ‘periodic’ contract (after your fixed term ends) your landlord must serve a 'section 13' notice to increase the rent. Landlords can only request a rent increase up to a level no higher than ‘market rent’. In theory, tenants can challenge a rent increase at a First Tier Tribunal, which will judge whether the increase is legitimate. But in many cases, a ceiling of ‘market rent’ allows for very very large rent increases. We’ve heard lots of stories of rises in excess of 10, even 20 per cent. Add to this the threat of a no-fault eviction and you wouldn’t blame tenants for feeling like there’s nothing they can do when they’re hit with an extortionate rent hike. In fact, 25% of renters told us that they’d forgone challenging a rent increase they thought was unfair in the last five years because they feared a retaliatory eviction.

How to stabilise rents in a new, more secure system

One way we can tackle this problem is by setting fair limits on how much landlords can increase the rent during your tenancy. Alongside the Renters Reform Coalition, Shelter is calling for radical reforms to make private renting more secure. As well as indefinite tenancies and an end to unfair evictions, we want to see rent increases restricted to once a year, and limited to a rise either in line with inflation or wage growth, whichever is lower.? This would allow for some fair rises to rents, whilst preventing big, unpredictable jumps that force you out of your home. You can read more detail in our briefing on rent stabilisation. The graph below shows, for a tenant who started renting an average rented home in April 2015 and faced the maximum rent increase each year, this would leave them ￡84 a month – over ￡1000 a year - better off in 2024 than if their rent had been allowed to follow the market.

As we’ll explore in our next piece on this topic, this sort of approach is commonplace across Europe. Far from the wild, flawed policy that many commentators would like to claim it is, it is in fact, incredibly normal. Both landlords and tenants should have nothing to fear from rent stabilisation.

But what about landlords?

Our research also shows that regulating rents won’t have the disastrous consequences many will claim it would. When we modelled rent stabilisation back in 2015, our research found that it was unlikely to have unintended consequences, like an exodus of landlords from the sector. In fact, while landlords may decide to increase the rent to cover increases in their costs, many landlords increase the rent simply because they can. 31% of landlords in a YouGov survey said that they last increased the rent because 'the market was going that way', while 43% did so simply because their letting agent advised them to. This shows that many increases have very little to do with a landlord’s costs. Revealingly, our research also showed that landlords without any mortgage are almost as likely to increase rents as those with a mortgage. Besides, why should tenants bear the entire brunt of changes to landlords’ business expenses? Landlords and agents are passing on market risks to tenants, rather than absorbing it themselves. This is not how most business investments work. And nor should it be. Tenants should have a right to a stable home and ought to have protection from short term shocks and crises, not have all the risk passed onto them. Renters are least able to weather such ups and downs. And the impact on them - losing their home - is extremely harmful. In our next piece, we’ll explore whether this kind of policy has had a negative impact on landlords and their willingness to let properties in other countries (spoiler: it hasn’t!). But there’s no need to wait for that.