Rachel Reeves considers rent freeze as Iran war threatens household finances

Ms Reeves is weighing up a temporary halt on private rent increases as part of a wider cost of living support package expected in the coming weeks, according to new reports.

The proposal, which is still being discussed within Whitehall, would mark a significant shift in approach, as Ms Reeves had previously ruled out rent controls as part of the Government’s renters' rights reforms coming into force this week.

Officials are increasingly concerned about how disruption linked to the Iran conflict, including pressure on global energy routes such as the Strait of Hormuz, could feed through to mortgage rates and household finances.

Under the plan, landlords across England would not be allowed to raise rents for a 12-month period.

The Guardian explained the discussions are still at an early stage, but sources suggest the preferred option is a full freeze rather than a limit tied to inflation or wage growth.

To safeguard housing development, newly constructed properties would be excluded from any restrictions, an acknowledgement that current building rates fall roughly a third short of what Labour needs to deliver its manifesto pledge of 1.5 million new homes this parliament.

The Treasury refused to engage with what it described as "speculation" when approached for comment.

Ms Reeves is understood to be exploring several potential interventions in rental markets as part of her broader strategy to contain housing costs.

Opinion on the proposed intervention remains sharply divided among policy experts.

Ben Beadle, Chief Executive of the National Residential Landlords Association, has warned that plans for a one-year rent freeze would damage the rental market and reduce housing supply.

He said introducing a freeze would be "a disaster for landlord and investor confidence" and warned "any hope of growing the market – or even retaining the homes that millions of families rely on – would be lost".

Mr Beadle also argued there is "no evidence" rent controls would make housing more affordable, adding that reduced supply would "inevitably drive new rents still higher".

Even if the plans are not confirmed, he criticised the uncertainty, warning it could push landlords to leave the sector, with some deciding "this is the moment to exit the private rented sector for good".

George Bangham, who leads social policy at the New Economics Foundation thinktank, argued that carefully implemented rent controls could address what he described as an affordability crisis in private renting that predates the pandemic.

"Other countries in western Europe already do this, and England used to from 1915 until 1989," he said. "We know rent controls can fix an affordability crisis if done carefully, we just need to be willing to impose them."

Robert Colvile, director of the Centre for Policy Studies, offered a starkly different assessment.

"This feels like a mind-boggling scale of intervention in the private market," he said. "If the government wants to bring rents down it should build an awful lot more houses."

The rent freeze proposal forms part of a wider government effort to mitigate surging inflation triggered by the Iran conflict, with the IMF warning this month that Britain faces the steepest growth downgrade and joint highest inflation among G7 nations this year.

Speaking to Sky News on Monday, Prime Minister Keir Starmer acknowledged households may need to adjust their spending habits depending on how long hostilities continue.

"I can see that if there's more impact, people might change their habits. Where they go on holiday this year, what they're buying in the supermarket, that sort of thing," he said.

Labour faces anticipated losses in next month's local elections, with several urban councils expected to fall to the Greens.

Similar rental restrictions have recently been introduced elsewhere, including Scotland, where MSPs passed legislation enabling ministers to cap rents in designated areas, and Spain, where tenants can now demand a freeze lasting up to two years.