A modern system for fair rents

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Private renters want cost relief now: their rent is too high. New housebuilding — particularly of social housing — will help in the long run, but it will not fix affordability challenges overnight. Immediate action is needed.

This NEF working paper analyses today’s affordability crisis in the private-rented sector (PRS), and the wide range of factors driving it. Its emphasis is on learning from history and from other countries: affordability crises have happened before, and policymakers have learned how to tackle them successfully. Where policy has gone wrong over the past generation is in going too far in removing security of housing tenure for renters, and in removing all regulations on rent prices – both of which happened in the Housing Act 1988, in its quest to build an investable asset class for landlords. The removal of these regulations achieved its policy aim of creating a profitable landlord business model where it didn’t exist before, but at a high cost to the living standards of England’s 4.6 million private renting households.

Policy changes in the 1980s that raised costs in the PRS were followed in the 1990s by changes in lending policy in the banking sector. Building on credit liberalisation in the 1980s and the Housing Act 1988, this enabled landlords to access the fast-rising pool of bank credit via buy-to-let mortgages, introduced in September 1996. This marked the moment the PRS began to double in size, extending the reach of its low-security, high-cost tenure model from 10% of English households in 2000 to 18% by 2012‒13 and then 20.3% by 2016‒17. ​“Generation rent” had been born.

The passage of the landmark Renters’ Rights Act in 2025 marked a major step towards reining in the excesses of the era of modern landlordism, abolishing section 21 ​“no-fault” evictions to restore a measure of security of tenure for renters and bringing in crucial controls like bans on landlords accepting offers of above-advertised rent. But further action is needed if private rents are truly to be made affordable in the 21st century.

We propose a holistic programme of emergency housing affordability measures, in recognition that no single policy will solve the problem of structurally high rents. These measures should sit alongside the government’s wider programme to promote housebuilding, including through the £39bn social and affordable homes programme (SAHP) and reforms to the national planning policy framework:

1. Repealing the most damaging parts of the Housing Act 1988, building on the Renters’ Rights Act 2025 that fundamentally improves security of tenure, and starts tackling landlords’ monopoly power, which allows them to extract scarcity rents. We propose an ​“emergency brake” on rent rises, which allows time for new home construction to improve affordability, and to build a longer-term new system for fair rents.
2. Building a social and community acquisition programme, supporting an orderly shrinkage of the PRS by granting right of first refusal and scaling up acquisition capacity for local authorities, community organisations, and housing associations. We discuss a range of routes to achieve this.
3. Investing in the enforcement of existing regulations in the PRS, particularly to improve the capacity of housing tribunals to swiftly remedy disputes between landlords and tenants. Planning and licensing enforcement capacity will also need to be scaled up to ensure that PRS dwellings are not converted or sold to become short-term holiday lets or second homes or to sit empty.
4. Instituting tax reforms to reduce distortions that favour residential property investment, notably around the national insurance treatment of rental income.

The biggest innovation in our programme is a proposal to build a new national system of fair rents, inspired by the name of England’s 20th-century rent controls but learning from the best modern examples around Europe to build a wholly new system. Our proposed design combines an emergency brake, which could be implemented quickly, to address widespread experiences of the cost-of-living crisis, with an iterative and evidence-led transition to a long-term system of rent regulation.

To rebuild a system of fair rents, we propose the following:

1. Immediately implement an emergency brake on annual rent rises for PRS tenants. Rents can rise by the lower of consumer prices index (CPI) for the previous financial year or a fixed cap (we propose 2%). This would apply to rent increases for all tenancies, including between tenancies, so that rents would not reset to the unregulated market level. For this programme to be successful, it must avoid ​“vacancy decontrol” where landlords raise rents substantially between tenancies. The policy would not be permanent, but should last until a longer-term fair rents programme is in place: examples from elsewhere (such as Scotland’s 2022 rent freeze) show the dangers of time-limited rent freezes causing market instability when they are ended or extended.
2. Extend the scope of the new PRS database created by the Renters’ Rights Act 2025 so it collects a wider range of data on properties. Collecting appropriate data is the critical foundation for the success of any further rent regulation. Most important would be to capture rental prices each year, but the government could consult on capturing wider data, such as property quality, performance against the decent homes standard energy performance certificate (EPC) rating.
3. Create and delegate new powers to local leaders to declare fair rents pilots, the evidence base for which would be based on existing Office for National Statistics (ONS) statistics on private rents, plus data on local labour markets and from the expanded PRS database. We envisage mayoral combined authorities being the appropriate level of government to have this power.
4. Learning from fair rents pilots, design and implement a national fair rents system through a long-term, phased process that gradually converges existing rents with rent levels that are genuinely fair for private renters. How this phased process is implemented would be a crucial element of further policy design. It would need to be accompanied by detailed data collection to provide early warning of any adverse effects from the policy. Similarly, certain exemptions could apply, for example, landlords with portfolios under a certain size or with specific mortgage encumbrances.
5. Exempt new-build properties for a period from the emergency brake and fair rents systems. After that period, dwellings would phase gradually into the main fair rents system.
6. Keep the nationwide emergency brake in place until the end of the testing period and the national implementation of a fair rents system. This is to prevent rent increases in buffer zones bordering pilot areas for fair rents; stabilise pressures in other high-cost areas that have been highlighted in quantitative affordability findings; and provide a crucial backstop to prevent distortions, including mass evictions.

Public opinion is consistently in favour of stronger price regulation for private rents: for example, Ipsos MORI found in 2024 that 71% of the public supported capping annual rent rises at no more than the national inflation rate (versus 8% opposing). YouGov polling for Common Wealth in 2024 likewise found 75% public support for a rent controls policy that is specifically quality and location linked (versus 15% opposition). Rent affordability has become even more salient in the years since the Covid-19 pandemic, after several years of dramatic rent rises, as discussed in this paper. The level of regional variation in growth rate has also narrowed: every region now grows at between 6% and 9% per year, suggesting that rental unaffordability is a national phenomenon.

A well-designed and holistic rent controls policy would give policymakers an appropriately powerful tool to redress the acute affordability crisis in the PRS, and to do so over a much shorter timeframe than the usual policy of waiting for new housing supply to bring down rental prices. A well-designed rent controls policy complements the construction of new dwellings and should be implemented alongside accelerated efforts to build new dwellings, particularly for social rent.

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