Landlords are already repositioning across the UK as rental conditions diverge – and a national rent cap could accelerate the damage
Rent control policy risks making renting more expensive for the poorest tenants because the buy-to-let market has fragmented into conditions so localised that no national metric can reflect them accurately, a leading residential property lawyer has warned.
The question has become newly urgent following Andy Burnham's all-but-certain path to succeeding Sir Keir Starmer as prime minister. Burnham, who stepped down as Greater Manchester mayor after winning the Makerfield by-election in June, is the only declared candidate in the Labour leadership contest and has secured nominations from more than 85% of the Parliamentary Labour Party. He has previously called for rent controls and sought devolved powers to impose them during his time in Manchester, reigniting debate about whether the policy could become national under his leadership.
David Smith, partner and residential property law specialist at Bishop & Sewell in London, told Mortgage Introducer landlords are already repositioning in response to diverging market conditions across the UK, and any policy intervention based on national averages risks pulling rents upward in areas where they would otherwise remain affordable.
"It's very area and property type specific," Smith said. "There are far too many one-bed flats out there for the market's interest, and landlords are repositioning to different parts of the country where they think returns are better."
London hits an affordability ceiling
Smith pointed to a structural shift playing out across London and its surrounding counties, where the capital's rental market has effectively reached the limits of what tenants can pay. Average private rents across the UK stood at £1,381 a month in April, up 3.5% on the year, according to the Office for National Statistics. But that national figure, Smith argued, masks a more complex picture on the ground.
"Rents in London are pretty flat," he said. "Rents in the home counties are rising quite quickly and are starting to show parity with London. The London market has, to some extent, reached affordability thresholds. People just don't have any more money, so you can't put rent up."
He drew a parallel with Manchester, where significant new-build activity has softened rents in the city itself, while satellite towns are experiencing rapid growth. "If you go to Macclesfield, people are pushing out from Manchester and rents are really rising in some of those surrounding places," he said.
That kind of divergence, Smith argued, makes the rental market almost impossible to regulate effectively at a national level. "The situation is super localised at the moment. You might go somewhere that's great, and 10 miles down the road it's a wasteland for rental. It's become a hyper-local market."
Why do rent controls risk raising rents for the poorest?
The challenge for the next government is a national rent control metric anchored to average wage growth would not reflect those local realities, Smith warned. The consequences, he said, could be severe for lower-income renters.
"Average wage growth in London and average wage growth in Sheffield, it's not the same discussion," he said. "If you peg rent to that number, there'll be lots of relatively not well-off people who might really, really suffer, because if you set a peg, you tend to find that obviously it pulls some rents down, but it pulls other rents up."
He cited the Local Housing Allowance (LHA) as a cautionary example of this dynamic. When the LHA was capped at a fixed figure rather than a local percentile, some landlords in lower-cost areas raised rents to match the threshold, knowing tenants on housing benefit could access that level of support. "Everyone else had to pay the same amount," Smith said. "Percentiles have a suck-up factor as well as a hold-down factor. That's what I mean when I say rent control often increases rents in some areas."
The problem compounds when localised models are applied. Smith used Uxbridge, which sits on the London Underground network but falls outside Greater London's boundary, as an example of the geographic anomalies any area-based scheme would create. "It has Heathrow there as a huge employer, a huge rental sector and a couple of universities," he said. "You get these places where you'll completely screw up areas that adjoin controlled zones."
"The more you interfere," Smith said, "the more problems you create for yourself."
The stakes extend into the mortgage market. Landlord sentiment has been cooling under the weight of regulatory change, and smaller landlords are already leaving the sector. If rent control adds another layer of uncertainty, borrowing demand could follow.
The case for stability over more reform
Smith's overriding message was one of restraint. After years of successive policy changes that failed to complete their legislative journey, what the private rented sector most needs now is certainty, not further disruption layered on top of the Renters' Rights Act, which abolished no-fault evictions and introduced new rent-setting controls earlier this year.
"Things have been enormously unstable really since 2019, where successive governments have said they're going to change things in the sector, produced a paper and a bill, and then the administration gets thrown out," Smith said. "This administration lasted long enough to get the Renters' Rights Act through, just. What we really need, like most businesses, is a clear understanding of what the rules are and that they're going to stay that way for an extended period of time."
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