Report commissioned by Labour proposes introduction of private rent caps

A Labour-commissioned report has recommended implementing private rent caps if the party wins the next election.

The report, commissioned by Lisa Nandy in January 2023 during her tenure as shadow housing secretary, proposes implementing rent caps to restrict rent hikes within PRS tenancies.

These caps would be tied to either local wage growth or CPI, whichever is lower.

This type of rent cap is known as a ‘third-generation’ rent stabilisation measure, which the report recommends over first-generation rent controls, stating that they “do not work and are harmful”.

First-generation rent controls, also known as “hard rent controls”, freeze rent prices entirely.

>> See also: Rent caps could have ‘unintended consequences’ and lead to landlords leaving the market, CIH Cymru says

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Stephen Cowan, leader of Hammersmith and Fulham council and chair of the Private Rented Sector Commission led the review. The report was leaked earlier this week, before being launched on Wednesday 15 May.

His report emphasises that Labour will inherit a “broken housing market” and will need to prioritise reforming planning and land development policies to increase the supply of “genuinely affordable homes” to rent and buy.

A further recommendation of the report is that Labour create an annually updated National Landlords Register to enforce standards in the private rented sector.

The commission has said that the NLR should legally require landlords to register themselves, provide details of their properties and rents, and prove compliance with an annually updated PRS Decent Homes Standard.

The report adds that no-fault evictions must be scrapped, “including the back door no-fault evictions introduced by the Conservatives’ Renters (Reform) Bill”.

Critics of the bill have expressed concerns that loopholes in the Bill could result in evictions continuing through the backdoor. These include “excessive rent increases” and permitting landlords to evict tenants six months into a tenancy if they wish to sell a property or move family in.

Another measure recommended in the report is to prevent PRS landlords from moving to other sectors, such as short-term and holiday lets or the more profitable nightly-paid temporary accommodation and supported housing sectors. The commissioners argued that such a measure is needed to preserve the stock of homes available for long-term rent.

In response to the report, a Labour Party spokesperson said: “While we do believe action needs to be taken to protect renters and rebalance power, rent controls are not Labour Party policy as we remain mindful of the risk they could pose to the availability of rental properties and the harmful impacts any reduction in supply would have on renters. We look forward to the publication of Stephen Cowan’s independent report and his contribution to the debate on improving the private rented sector.”

They added: “In government, Labour would act where the Conservatives fail to ensure fairness and security for renters, immediately abolishing section 21, ending tenant bidding wars and extending Awaab’s law to the private rented sector.”