Chaos: Now Downing Street rules out rent freeze after backlash over ‘reckless’ rumours
Downing Street has ruled out a rent freeze just hours after the Chancellor refused to distance herself from the policy while speaking in the Commons.
The apparent kite flying sparked 24 hours of panic among residential landlords and economists, who dubbed the rumoured policy a would-be “disaster”.
Reeves had reportedly been considering the policy to ease the inflationary impacts of the Iran war.
Reeves stoked rumours in Commons
On Tuesday, Chancellor Rachel Reeves fuelled rumours – circulated on Monday night – that she was considering banning private rent hikes for a year.
Asked by Labour MP Yuan Yang whether she would impose a rent freeze, Reeves refused to rule out the policy.
She told the Commons: “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.”
Hours later, a Downing Street spokesperson said “We have no plans to implement this.”
The rent freeze rumours knocked the share price of multiple FTSE-listed buy-to-let mortgage lenders and were widely panned by economists and landlords.
Stocks in OSB Group, one of the country’s biggest buy-to-let mortgage providers, fell 3.6 per cent while shares in Paragon Banking Group slipped 2.4 per cent.
Kite-flying ‘reckless’
Robert Colvile, head of the Centre for Policy Studies think tank, described the policy as a “mind-boggling scale of intervention in the private market”.
He had told Morning Wire: “The period in which we had them in England saw the private rental stock become run-down and our big cities empty out.
That’s because with rent control there is no incentive for landlords to renovate or even repair their properties.”
Melanie Leech, chief executive of the British Property Federation, said: “We recognise the current pressures on individuals and households, but there is no surer way for the Government to kill off its ambitions to deliver the new homes we desperately need […] than well-intentioned but inept knee-jerk Government intervention.”
The government then moved to put a lid on the speculation, with a Downing Street spokesperson saying: “Just to be completely clear, that is not the approach we will be taking.”
The National Residential Landlords Association hit out at the government’s apparent kite flying on the policy: “It is reckless for this kind of uncertainty to be created in the same week that major reforms already causing concern among landlords come into force.
“For many, it may be enough to conclude that this is the moment to exit the private rented sector for good.”
Housing minister Matthew Pennycook had previously said Labour was against the policy, resisting Green Party calls to impose rent controls.
Responding to a question from a Labour MP, Pennycook said earlier this month: “The government do not support the introduction of rent controls, which we believe could make life more difficult for renters.
“There is sufficient international evidence from countries such as Sweden and Germany, and from individual cities such as San Francisco, as well as the recent Scottish experience, to attest to the potential detrimental impacts of rent controls on tenants.”