Rachel Reeves considering rent freeze to limit Iran war fallout

Rachel Reeves is considering imposing a one-year rent freeze on private sector homes amid growing alarm in government about the impact of the Iran war on voters’ budgets.

Landlords in England would be banned from raising rents for a limited period of time under the proposals, which are being debated within government as part of a major cost of living package to be launched in the coming weeks.

The measure would be a significant reversal from the chancellor, who has resisted including rent controls in the government’s renters’ rights reforms, which come into force on Friday.

But sources informed of the government discussions say ministers are now sufficiently worried about what the conflict in Iran will mean for mortgages and household budgets that they are willing to consider exceptional measures.

With Labour braced for heavy losses at the local elections, Keir Starmer looking vulnerable as prime minister and economists predicting a surge in inflation, ministers are looking for immediate ways to ease the cost of living for voters.

George Bangham, head of social policy at the New Economics Foundation thinktank, said: “We have an affordability crisis in the private rented sector, which dates back to before the pandemic. Other countries in western Europe already do this, and England used to from 1915 until 1989.

“We know rent controls can fix an affordability crisis if done carefully, we just need to be willing to impose them.”

Others, however, warn that controls on private sector rents will discourage developers from building housing and therefore exacerbate affordability problems in the long term.

Robert Colvile, head of the Centre for Policy Studies, said: “This feels like a mind-boggling scale of intervention in the private market. If the government wants to bring rents down it should build an awful lot more houses.”

The Treasury said it would not comment on “speculation”.

Discussions are understood to be at an early stage, although Reeves is said to be looking at a number of interventions in the rental markets to keep housing costs down. Sources say that of these, her favoured option was an outright freeze, which would last a year.

The chancellor is expected to exempt new-build properties from the freeze in a bid to encourage developers to keep working on new schemes. Labour has promised to oversee the building of 1.5m homes over the course of the parliament, though the numbers now being built are about a third below where they would need to be to hit that target.

Labour commissioned a report while in opposition from Stephen Cowan, the leader of Hammersmith and Fulham council, which recommended a rent cap in England and Wales ensuring rents do not rise by more than either inflation or local wages.