Rent controls are a potential bombshell in Labour’s manifesto that could have unintended consequences, according to one property expert.

Writing in Property Week, equities analyst and consultant Alastair Stewart (main image) says a vague pledge to “empower [private tenants] to challenge unreasonable rent increases” was slipped into the document and follows the publication of a report commissioned by Labour on the PRS, by the leader of Hammersmith and Fulham Council, Stephen Cowan.

This proposes a ‘double lock’ for renters renewing their tenancies: any rise would be capped at either consumer price inflation or local wage growth – whichever is lower – across England and Wales.

“Labour has done little to distance itself from the report,” says Stewart. “In summer 2023, then shadow housing secretary Lisa Nandy opposed controls, to the ire of many in the party. But it’s a genie that will be hard to shove back into the bottle. Her successor Angela Rayner has kept her own counsel, while London and Manchester mayors Sadiq Khan and Andy Burnham have been vocal supporters.”

Freeze

He warns the party to take heed of the graphic illustration north of the border – Scotland’s eight-month ‘emergency’ freeze on all private or affordable rents and an eviction ban in response to the cost-of-living crisis followed by a cap of 3% lasting from April 2023 until March 2024.

This resulted in a grinding halt to institutional investment in build-to-rent while private landlords soon learned how to circumvent the rules, says Stewart, where at the scheduled end of each tenancy they simply handed tenants their marching orders unless they paid steep increases.

Since their imposition, rents on new tenancies have risen 20%, the biggest jump of any mainland UK region, with a national average of 15%, according to Rightmove.

“Rent controls are invariably proposed with the best of intentions,” he adds. “But, to borrow from my Glaswegian vernacular, they dinnae work.”