Andy Burnham looks set to abandon plans to introduce rent controls as part of his cost of living policy blitz following Whitehall concerns that they would have a negative impact on the private rented sector.
The new Prime Minister told reporters earlier this week that he was looking at the policy in a bid to give people some “breathing room” from the increasing prices in everyday life.
Asked what his priorities were and whether he was looking at bus fares, energy bills or rent freezes as part of his package of help upon entering No10, he said “we’re looking at all of those things” but stressed no final decisions had been made.
Burnham added that he wanted to introduce policies that “people will feel and feel quite quickly”.
“It won’t solve everything. It won’t take all of the pressure off, but it just shows a direction of travel and that we’re serious about helping them out,” he added.
But The i Paper understands that rent controls will not be part of the package, with the policy not under active consideration by officials.
Burnham has already announced a VAT cut on electricity bills and a new £2 cap on bus fares as part of his cost of living plans.
Angela Rayner has opposed rent controls
The Ministry for Housing, Communities and Local Government has repeatedly taken a dim view of rent controls, pointing instead to the impact its Renters Reform Act is having on the private rented sector.
Early figures following the introduction of the new law showed that landlords were making fewer increases in rent, with letting agents reporting that rent increases were 23 per cent lower compared to the previous year.
Angela Rayner has returned to her former brief as Housing Secretary following Burnham’s coronation as Labour leader and Prime Minister, and she has previously opposed the introduction of rent controls.
It is a similar stance to that taken by her Housing Minister Matthew Pennycook, who earlier this year warned that there was “sufficient international evidence” demonstrating the “potential detrimental impacts” of such a policy.
Florence Eshalomi, the new minister in the department, was chair of the Housing, Communities and Local Government Committee, which issued a report this year also warning against rent controls and the “potential consequences this could have on the supply of affordable properties”.
Burnham has long advocated for the introduction of rent controls during his time as Greater Manchester mayor, penning a letter in 2023 to the then Conservative government, demanding it introduce a freeze on rents to protect tenants during the cost of living crisis.
Economists and policymakers agree that rent controls can lower costs in the short term, they argue that their benefits are outweighed by the drawbacks. In particular, rent freezes can constrain the supply of rental properties as landlords sell up due to being unable able to meet their costs.
They can also discourage the construction of new rental properties, while also disincentivising landlords from maintaining their properties and pushing up prices in the unregulated rented sector at the same time.
Policy was rejected by Keir Starmer
The policy was briefly looked at earlier this year by former chancellor Rachel Reeves, who told MPs in April she would “use every lever we have to bear down on the cost of living, including for people in the private rented sector”.
The move was rejected by Sir Keir Starmer, however, and a former government source told The i Paper that MHCLG did not undertake any work on the policy, adding: “We always thought it was a mad idea.”
Even close Burnham ally, Culture Secretary Lisa Nandy, has previously dismissed the notion of rent freezes. During her time as shadow housing secretary Nandy warned that rent controls were a “short term fix” that would “almost certainly” leave people homeless.
The idea of rent controls was criticised earlier this week by Ben Beadle, chief executive of the National Residential Landlords Association.
He said: “Rent controls would choke off supply in the private rented sector, making it harder to meet the Prime Minister’s welcome ambition to end rough sleeping.
“The reality is that rent increases have fallen by two thirds over the past two years at exactly the time when supply is better meeting tenant demand. Rent controls would undermine all of this.”
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