BLOGS

The case for caution

Propertymark, the professional body representing letting agents and property managers, has raised concerns over proposals floated by the Chancellor to introduce short-term rent controls in England. The trade body argues that limiting rent increases—even temporarily—could deter investment, reduce available stock, and ultimately harm the tenants such policies aim to protect.

Their warning comes as the private rented sector faces mounting pressures: mortgage rates remain elevated, regulatory burdens have increased, and tenant demand continues to outstrip supply in most regions. Propertymark contends that rent caps risk turning a tight market into a full-blown crisis.

Rental supply is already shrinking

REalyse data reveals that rental listings have declined year-on-year across every region of the UK. The steepest falls are in Wales (down 26%) and Scotland (down 19%), while even relatively stable markets like London recorded marginal declines. England's regions saw listing volumes contract by between 1% and 4% on average.

This contraction is happening despite—or perhaps because of—elevated rents. Average asking rents now exceed £2,750 per month in London, £1,600 in the South East, and £1,100 to £1,400 across much of the Midlands and North. Tenants are stretched, but landlords are not necessarily benefiting: higher interest rates and running costs have eroded margins, prompting some to sell.

Properties that do reach the market are letting quickly. Average days on market sit at around 39 days nationally, with Scotland's rental stock clearing fastest at just 32 days—a symptom of acute undersupply rather than healthy liquidity.

Scotland's rent controls: a cautionary tale

Scotland implemented emergency rent controls in 2022, initially freezing rents before moving to a cap system. The policy was designed to shield tenants from sudden increases during the cost-of-living crisis. Yet the data suggests unintended consequences.

REalyse analysis shows Scottish rental listings have fallen by 19% year-on-year—the sharpest decline among the home nations. Fewer landlords are entering the market, and existing landlords appear to be exiting at pace. The rapid turnover (31.7 days on market) points to intense competition for the limited stock that remains.

While correlation is not causation, the Scottish experience offers a real-world stress test. Critics of rent controls argue that capping income without capping costs—mortgage interest, maintenance, regulatory compliance—makes buy-to-let mathematics increasingly unworkable for smaller portfolio holders.

Yields under pressure

Gross rental yields across the UK average around 5.9%, according to REalyse data, though regional variation is significant. Higher-yielding areas such as Sunderland (9.1%), Aberdeen (8.2%), and Glasgow (7.9%) still offer attractive returns for investors focused on income. However, much of southern England and prime urban markets sit closer to 4–5%, leaving little buffer against rising costs.

For landlords operating on tight margins, any policy that constrains future rent growth threatens viability. Propertymark's concern is that rent controls—even if intended as temporary—could prompt a wave of sales, converting rental properties to owner-occupation and reducing housing options for tenants who cannot yet afford to buy.

The affordability paradox

Tenant advocates counter that without intervention, rents will continue rising faster than wages, pushing more households into poverty or out of their communities entirely. Rent-to-income ratios in many urban areas already exceed recommended thresholds, and median incomes have not kept pace with housing costs.

The challenge for policymakers is balancing immediate affordability relief against longer-term supply dynamics. Short-term caps may ease monthly bills today, but if they accelerate landlord exits, the resulting competition for fewer properties could drive rents higher once controls are lifted.

What comes next

The Government has yet to confirm specific rent control measures, but the direction of travel is clear. The Renters' Rights Bill already introduces open-ended tenancies and limits on eviction grounds, shifting the balance of power toward tenants. Additional rent restrictions would represent another significant intervention in market dynamics.

Propertymark is calling for a holistic approach: measures that protect tenants while also incentivising new rental supply, whether through build-to-rent investment, reform of taxation on landlords, or streamlined planning for purpose-built rental housing. Without fresh stock entering the market, demand-side interventions risk exacerbating the very shortages they seek to address.

For investors and landlords, the message is to watch legislative developments closely and model scenarios that include constrained rental growth. For tenants, the picture is more complex: rent controls may offer short-term relief, but if supply continues to contract, the scramble for quality rental homes will only intensify.