Runaway rents are a “national phenomenon”, with private renters in every region of England seeing increases, according to the New Economics Foundation (NEF).
Tenants are now seeing increases of between 6% and 9% each year, according to NEF research published today.
The report reveals that low-income renters spend just under half of their income (48.5%) on rent, and warns that without further action, affordability will continue to deteriorate across the country.
The research finds that Tenants’ Rights Lawwhich took effect this month, was a vital step forward in protecting renters from unfair evictions and other abuses.
However, it will not solve the problem of unaffordable rents by itself, the NEF said.
The proposals call for rent increases to be capped at a minimum Economic inflation Or 2%, combined with a return to the “fair rents” system, which was used throughout the 20th century until it was abolished in the 1980s.
This policy worked on the principle that landlords should receive a fair rental income, and in return should not exploit tenants by charging exorbitant rents.
Molly Harris, senior researcher at NEF, said: “It doesn’t matter who you are, Living A safe and affordable home is the foundation of a good life. But private renters are often pushed into expensive and substandard homes.
“The Tenants’ Bill of Rights is a valuable step forward in making private renting safer and fairer – but it does not address the problem of runaway rents in the UK.
“Reviving a system that has been successful for more than 70 years, but redesigned for the 21st centurystreet last century, would make life more affordable for private renters across the country.
Before the pandemic, rent rises were modest and varied across the country, from around 1% in the North East to more than 3% in the east of England.
Since then, the picture has changed dramatically with all regions growing between 6-9%, and the three fastest-growing rental markets are in Northwest cities.
The report finds that decades of policy choices, including the removal of rent controls, the sale of social homes through Right to Buy and the introduction of buy-to-let mortgages, have worsened housing affordability in every region of the UK.
Meanwhile, the National Economic Forum said the consequences are being felt across the economy. Higher rents shift income from renters, who are more likely to spend, to landlords, who are more likely to save or reinvest in assets. This suppresses consumer demand and directs billions in housing benefits to private landlords.
The National Economic Forum paper proposes a comprehensive reform programme, combining immediate action with a long-term structural framework:
- immediate An ’emergency brake’ on runaway rents until a fair rental system is established. This will temporarily cap intra- and inter-rent rises at either inflation rates or 2%, whichever is lower
- New powers for Joint municipal authorities to publicize local rent pressures and run “fair rent” pilot programmes, with rent levels set by reference to local indices rather than unspecified market rents
- Gradual implementation Fair rents in areas of the country experiencing runaway rents through a long-term phased process to avoid rent collapse or excessive rent change.
- exemption New properties are exempt from the emergency brake and fair rent system for a period, and then gradually brought into the fair rent system
The proposals are based on international evidence, including from France, Germany, Ireland and Spain, all of which operate rent regulation systems. Rent controls in Paris, for example, have seen rents fall by 3.7% to 4.2% on average, with no evidence of negative effects on supply in the rental market, the forum said.
Public opinion strongly supports action on rent controls. An Ipsos MORI poll in 2024 showed that 71% of the public supported capping annual rent rises at no more than the national inflation rate, while only 8% opposed it. A separate YouGov poll conducted for Common Wealth found 75% support for rent controls linked to quality and location.
