England Rent Cap Proposal: IPPR Pushes Inflation-Linked Limits for Private Rents

England’s rental debate has moved sharply back into focus after the Institute for Public Policy Research called for a new cap on private rent increases, a proposal that could become part of the wider political argument over how Labour should respond to rising household costs.

The IPPR wants ministers to consider a “double lock” for private rents in England. Under the plan, landlords would only be able to raise rents each year by the lower of two measures: consumer price inflation or wage growth. The aim is to stop rental bills from racing ahead of tenants’ incomes during periods of economic pressure.

The proposal lands at a sensitive moment for Chancellor Rachel Reeves, who is preparing further cost-of-living measures as inflation risks return to the centre of UK politics. Energy prices, global instability and pressure on household budgets have made housing costs harder to ignore, especially for renters who have little control over annual increases.

For the IPPR, the argument is straightforward: building more homes remains essential, but it will not reduce rents quickly enough for households already under strain. Expanding housing benefit alone would be costly, while doing nothing would leave millions of renters exposed to another wave of affordability pressure.

What the IPPR rent cap would mean for tenants and landlords

The proposed system would apply to private rented homes in England and would cover both existing tenancies and new tenants moving into a property. That point is important because many rent-control systems protect sitting tenants but allow landlords to reset prices sharply when a property is re-let.

By applying the cap more widely, the IPPR is trying to prevent landlords from shifting increases from existing tenants to new renters. The think tank says this would offer more predictable housing costs and reduce the risk of sudden jumps when households move.

According to the IPPR’s estimates, around 2.4 million people in the UK are already facing unaffordable rents, commonly defined as spending more than 30% of gross income on housing. Without intervention, that number could rise by another 340,000 by the end of the decade.

The think tank also argues that if a similar system had been in place since 2020, rents could be around 7% lower by the end of the decade. It estimates average savings of roughly £850 a year for renters in England, rising to more than £1,700 a year in London.

The plan is not designed as a permanent rent freeze. Rent increases would still be allowed, but they would be linked to wider economic conditions rather than being driven only by market demand. In years when wages grow slowly, rent increases would be held closer to what households can realistically afford.

The IPPR has included exemptions to reduce the risk of damaging housing supply. New-build homes would be exempt from the cap for their first 10 years, giving developers and build-to-rent investors more certainty. Landlords who make major improvements, such as installing double glazing, insulation or solar panels, could also be allowed to raise rents above the cap.

The proposal also includes changes beyond rent rises. The think tank wants housing benefit increased so it covers the cheapest 30% of local rents again, a move it estimates would cost around £600 million a year. It also recommends tighter rules for short-term lets, including licensing and limits on how many nights a property can be rented out through platforms such as Airbnb.

That short-term lets proposal matters because policymakers fear some landlords could leave the long-term rental market if new rules reduce returns. A licensing system would be designed to stop homes being moved out of the private rented sector at scale.

Why the proposal is politically sensitive

The IPPR is not just another think tank in this debate. It has strong connections within Labour policy circles, which is why its rent-cap proposal is likely to attract attention inside Whitehall even if ministers do not adopt it immediately.

Reports suggest IPPR staff have presented their ideas to officials in the Treasury, Downing Street and the Ministry of Housing, Communities and Local Government. That does not mean the policy will become law, but it shows the proposal is being discussed at a serious level.

Rachel Reeves has already signalled that housing costs are part of the government’s cost-of-living agenda. A full one-year rent freeze was reportedly considered and then ruled out by Downing Street, but the broader question of how to reduce pressure on renters remains unresolved.

The debate also comes after major rental reforms introduced under Labour. Landlords are now facing tighter rules, including limits on rent increases to once a year and stronger rights for tenants to challenge rises they believe are unreasonable.

For renters, the appeal of a cap is clear. In many parts of England, wages have failed to keep pace with housing costs, leaving households with less money for food, energy, transport and savings. Swikblog has also covered the wider squeeze on the UK economy in its report on UK growth concerns and recession risks.

For landlords, the proposal raises a different concern: supply. Critics argue that rent controls can discourage investment, push smaller landlords to sell and reduce the number of homes available to rent. If supply falls while demand remains high, tenants could face fewer choices and more competition for available homes.

Conservative politicians and landlord groups have warned that capping rents could make the market less attractive at a time when many buy-to-let owners are already dealing with higher mortgage costs, tax changes and new regulation.

Recent market concerns have focused heavily on London, where rental availability has reportedly fallen compared with levels seen before Labour came to power. Landlord groups argue that further restrictions could accelerate the exit of private landlords from the sector.

Scotland’s temporary rent controls are also being used as a warning by opponents. The policy helped some tenants in the short term, but rents rose sharply after restrictions ended, fuelling concerns that caps can store up pressure rather than solve the underlying shortage of homes.

The IPPR accepts that rent controls can create side effects, but says its version has been designed to avoid the worst outcomes. Exempting new-build homes, allowing higher increases after genuine improvements and regulating short-term lets are all intended to keep homes in the long-term rental market while protecting tenants from sudden cost shocks.

The wider housing market is already facing policy change on several fronts. Swikblog previously reported on the government’s plan to limit leasehold charges in its coverage of the UK ground rent cap proposal, another sign that ministers are under pressure to act on housing affordability.

The central question now is whether Labour wants to make rent control part of its official economic response. A rent cap would be popular with many tenants, especially younger voters in cities, but it would also trigger a fierce reaction from landlords, developers and investors.

For now, the IPPR proposal remains a policy recommendation rather than government policy. But with inflation concerns rising and private rents still taking a large share of household income, the idea is unlikely to disappear quickly.

More information about the think tank’s wider housing and economic policy work is available through the Institute for Public Policy Research.

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