Downing Street Dismisses Reported Rent Freeze Proposal as Chancellor Faces Internal Backlash

Downing Street has rejected suggestions that Chancellor Rachel Reeves is planning to impose a one-year freeze on private sector rents in England, despite reports that she had been considering the measure as part of a package to ease the cost of living.

A spokesperson for Prime Minister Keir Starmer said on Tuesday that freezing private sector rents was "not the approach we will be taking," according to multiple reports. The spokesperson added, "We have no plans to implement this. Our focus remains on cutting bills and backing renters alongside lower energy prices." The Treasury declined to comment on what it called "speculation."

However, Reeves herself did not rule out the idea when questioned in the House of Commons, telling Labour MP Yuan Yang, "I will do everything in my power and use every lever we have to bear down on the cost of living, including for people in the private rented sector."

The reports, first published by The Guardian, suggested that the chancellor had been considering a temporary ban on rent increases for private landlords in England, as part of a wider cost of living package expected in the coming weeks. The measure would have been a significant reversal for Reeves, who previously resisted including rent controls in the government's renters' rights reforms, which are due to come into force on Friday.

Coverage Comparison

Reports from The Guardian, which has been closely tracking the story, indicate that the proposal was being debated within government as ministers grew increasingly concerned about the impact of the Iran war on household budgets and inflation. The conflict has disrupted shipping lanes and driven up oil prices, leading economists to predict a surge in inflation that could hit the UK harder than other developed nations.

According to these reports, the rent freeze was one of several options under consideration, with the chancellor looking at ways to alleviate the financial pressure on voters ahead of local elections, where Labour is expected to suffer heavy losses. However, the idea quickly drew opposition from within the government. Senior ministers, including Housing Secretary Steve Reed and Housing Minister Matthew Pennycook, publicly criticized the proposal. Pennycook said on Wednesday, "We are not doing this. It's not a credible or serious policy proposition," adding that the government had exhaustively reviewed the evidence from countries like Sweden, Germany, and cities such as San Francisco, as well as the Scottish experience with rent controls.

Key Claims

  • Chancellor Rachel Reeves was reportedly considering a one-year freeze on private sector rents in England, according to sources cited by The Guardian.
  • The proposal would have banned landlords from raising rents for a limited period and was part of a broader cost of living package, though these details have not been independently confirmed.
  • The government is divided on the issue, with No 10 and several senior ministers dismissing the idea, while the chancellor has left the door open.
  • Shares in buy-to-let lenders, including OSB Group and Paragon Banking Group, fell following the reports, according to market data cited by The Guardian.
  • The Institute for Public Policy Research (IPPR), a thinktank close to the Labour government, has published a paper calling for a rent "double lock" linking rent increases to wages or inflation, as reported by The Guardian.
  • The Renters' Rights Act, which bans no-fault evictions and limits rent increases, is set to come into force on Friday, according to multiple reports.

Perspectives

The proposal has drawn mixed reactions. Some experts and Labour MPs argue that rent controls could help address an affordability crisis in the private rented sector. George Bangham, head of social policy at the New Economics Foundation, told The Guardian, "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."

Others, including the Centre for Policy Studies, warn of unintended consequences. Robert Colvile, its head, 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." Experts also caution that rent controls can push up rents for properties not covered by the policy and reduce overall housing supply.

The controversy has also fueled speculation about Reeves's future as chancellor, with reports that Starmer might reshuffle her after the local elections. During Prime Minister's Questions on Wednesday, Conservative leader Kemi Badenoch questioned the government's credibility and asked whether Starmer would "reshuffle the chancellor." Starmer praised Reeves but did not explicitly guarantee her position, according to reports.

As the Renters' Rights Act comes into force on Friday, the debate over rent controls is likely to continue, reflecting broader tensions within the government over how to address the cost of living crisis.