New research suggests landlords would be better-off under 'well-designed rent controls' rather than the years-long blitz of interest rate and tax hikes
Landlords have weathered interest rate hikes and tax changes more harshly than they would have experienced under a two-year freeze on rental prices, according to fresh research advocating for rent regulation.
The study, conducted jointly by the UCL Institute for Innovation and Public Purpose and the New Economics Foundation (NEC), contends that capping rents would prove less damaging to property owners than the financial pressures they have already absorbed in recent years.
The findings challenge common arguments against rent controls by demonstrating that landlords have already survived greater economic shocks than those proposed regulations would create.
According to the research, which drew on HM Revenue and Customs (HMRC) data, a 10 per cent reduction in rental costs equivalent to freezing prices at May 2024 levels would deliver annual savings of £1,300 for typical renting households.
Such a measure would render just two per cent of individual landlords unprofitable, the report found. By contrast, tax reforms and rising borrowing costs since 2021 have pushed 4.8 per cent of landlords into unprofitability.
A more substantial 20 per cent cut to private rents would put £2,400 back into renters' pockets annually while reducing government housing benefit expenditure by a minimum of £2billion each year.
Even under this scenario, landlords with mortgages would retain profits exceeding four times those of average British businesses, with unmortgaged property owners enjoying still greater returns.
Dr Beth Stratford, the report's author, noted that property owners continue to generate substantially higher returns than other British enterprises despite recent financial pressures.
She explaioned: "Well-designed rent controls, combined with the right fiscal and legal framework, create a historic opportunity.
"A managed transfer of homes out of the insecure and unaffordable private rented sector and into home ownership or secure and permanently affordable ownership by councils, housing associations and community-led organisations."
The researchers acknowledge that rent regulation would prompt some landlords to exit the market, but frame this as a chance to shift housing stock toward local authorities and community organisations.
They also propose extending notice periods to a minimum of six months, ensuring tenants have adequate time to secure alternative accommodation and receive compensation.
Landlords are being reminded of the additional costs coming their way thanks to the Renters' Rights Act, outside of traditional tax rises and changes to interest rates.
Ravi Sejpal, the director of Insurance at Karis Insurance, shared: "Landlords should look at what property insurance they have in place and check that they are comfortable with the level of coverage they have for flooding, leaks and other severe damage to the property.”
"Under the new legislation, if there is damage to the property, then there is more pressure to get that fixed quickly – which can be more expensive."
