What would a rent freeze mean for landlords?

Chancellor Rachel Reeves is reportedly thinking about a huge change to the housing market – a one-year rent freeze across England. The chancellor wants to protect renters from rising prices caused by the conflict in the Middle East. 

But history shows that rent caps aren’t necessarily an easy fix. So what’s the potential impact of a rent freeze on landlords and the rental market? And what lessons can we learn from cities that have brought in similar measures to stop rents from rising?

Why is a rent freeze in England being considered? 

The main reason the government is looking at a rent freeze is to protect people from a sudden jump in living costs.

Because of the ongoing conflict in the Middle East, the price of oil, energy, and everyday goods has risen around the world. Economists are warning the UK will be hit hard by this new wave of inflation, and ministers are concerned about families struggling to pay their bills.

The Chancellor is looking for quick ways to shield households from these sudden price shocks – and is considering a rent freeze to stop costs mounting. 

Renters’ campaign groups estimate that stopping rent increases for just one year could save the average household around £324.

How would a rent freeze work in England?

A rent freeze is a strict legal ban on raising rents for a set amount of time. If the chancellor’s preferred plan goes ahead, private landlords across England wouldn’t be allowed to increase their tenants’ rent for one full year. 

What would a rent freeze mean for landlords? 

A blanket rent freeze means a landlord’s income is capped exactly as global inflation drives up their own costs. Mortgages remain expensive and the everyday cost of simple repairs and property maintenance could increase too.

And with the measures from the Renters’ Rights Act coming into effect, there are already several new rent controls that landlords are having to adjust to.  

To suddenly freeze rents now, as the National Residential Landlord Association warned this week, will cause panic among landlords. 

The fear is that if landlords start losing money every month because their costs are higher than the rent they collect, they’ll simply sell their properties and leave the market entirely.

How have rent freezes worked in the other countries?

The main problem with stopping rent increases by law is that it disrupts the wider housing market. And in some circumstances, it ends up hurting the very people it’s supposed to protect. 

Here are some examples of city-wide rent freezes and their repercussions:

• Scotland’s emergency rent cap – during the last cost of living crisis, Scotland stopped rents from going up. Because the rules only protected people who already had a tenancy, the rents for new properties on the market shot up. It heavily punished any tenant looking to move
• Berlin’s rent freeze – in 2020, Berlin tried a strict five-year rent freeze. The impact on housing was drastic. While rents for some tenants stayed low, the number of homes actually available to rent dropped by over 50%. Landlords simply stopped renting out their properties and sold them to buyers instead – causing the rental supply to drop significantly 
• Stockholm’s long-term rent controls – Stockholm has had strict rent controls for years, designed to keep housing more affordable for everyone. But because landlords can’t make enough money to cover costs, there’s a massive housing shortage. If you want a rent-controlled apartment in the city, the average waiting list is over nine years long. 

All of these examples show that freezing rents might make monthly costs lower in theory, but that doesn’t help anyone if there are no actual homes left to rent.

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