BLOGS

The private rented sector houses nearly five million households across the UK, yet its future shape is being contested in Westminster, Holyrood and the Senedd alike. With average asking rents now exceeding £1,700 per month in England and properties letting in under six weeks, the political temptation to cap increases is understandable. Propertymark, however, has warned that rent controls risk triggering the very outcomes policymakers seek to avoid.

A market under strain

REalyse data shows average asking rents vary significantly by property type: flats command around £1,640 per month, terraced houses £1,710, semi-detached properties £1,650, and detached homes £2,220. Year-on-year growth ranges from 2.7% for semi-detached homes to 5.3% for detached properties, reflecting persistent demand against constrained supply.

Days on market remain tight across the board—flats let in roughly 38 days on average, while detached homes take around 45 days. These figures point to a structural imbalance: too few properties chasing too many tenants. When supply cannot respond, price signals intensify.

Regional differences add nuance. England's average rent of approximately £1,705 eclipses Scotland's £1,170 and Wales's £1,060, yet all three nations recorded positive rent growth over the past 12 months. Scotland, which already operates a form of rent control through the Cost of Living (Tenant Protection) Act, saw rents rise by around 1.1%—slower than England's marginal 0.1% but still upward. Critics argue that stabilised headline figures mask displacement effects, with some landlords exiting the sector entirely or switching to short-term lets.

Landlord margins and exit risk

One of Propertymark's core concerns is that rent caps compress landlord margins at a time when mortgage costs, regulatory compliance and energy-efficiency requirements are already squeezing returns. REalyse analysis indicates that average gross yields currently sit between 5.4% for detached houses and 5.9% for terraced properties—modest figures before tax, void periods and maintenance are considered.

If legislation limits the ability to adjust rents in line with rising costs, the arithmetic tips further against buy-to-let investment. Propertymark points to evidence from Berlin, where a 2020 rent freeze preceded a 25% drop in available rental listings before the policy was struck down. Similar patterns emerged in San Francisco and Stockholm: reduced supply, longer waiting lists and grey-market subletting.

In the UK context, planning pipeline data tracked by REalyse shows that build-to-rent completions have increased, yet the sector still accounts for a small fraction of total rental stock. If individual landlords accelerate sales, institutional supply alone cannot fill the gap in the short to medium term.

What the evidence suggests

Academic research and ONS housing statistics highlight the complexity of rent regulation. Short-term freezes or caps can provide immediate relief for sitting tenants, but they do not address the root cause of high rents: insufficient housing supply relative to household formation. Over time, capped markets tend to see deteriorating property quality, reduced mobility as tenants cling to below-market contracts, and widening inequality between protected incumbents and new entrants forced into unregulated segments.

Propertymark has called for a "supply-side first" approach, advocating planning reform, tax incentives for long-term landlords, and accelerated build-to-rent investment. The trade body also supports mandatory licensing and redress schemes to raise standards without deterring capital.

Conclusion: balancing relief with resilience

The cost-of-living crisis demands action, but Propertymark's warning is grounded in data and international precedent. With UK rents still climbing and gross yields compressed, policies that discourage landlord participation risk shrinking supply further—ultimately hurting the tenants they aim to protect. A more durable solution lies in expanding the housing stock, professionalising the sector and ensuring regulation does not inadvertently accelerate the exodus of responsible landlords.