Rent Controls in the RRA 2025

While the government rejects formal rent controls, the ability for tenants to challenge increases as embedded in the regulations creates a brake on rent growth. Surges in rents in recent years have been necessary to cover increasing costs. By delaying any increase via the courts, many rentals may become unviable. As a result, the market risks slowing, discouraging property investments and tightening supply in a market already under strain.

Rent Controls or not?

In the Guide to the Renters’ Rights Act 2025 (RRA 2025), the government says it does not support rent controls, and landlords are free to raise the rent up to market levels. But what does that mean, really?

The RRA 2025 allows tenants to challenge any rent increase. This is in the tenant's direct interest, as it postpones the new rent until sanctioned by the tribunal. Even if the increase was within market rates, tenants can gain time and defer the increase by simply challenging it.

This subtle form of rent controls paralyses rent increases and poses a menace to the letting business's viability altogether.

A thousand reasons for rents to go up

Landlords have many reasons to increase rents, most of them outside their control. In 2020, Brexit led to a shortage of skilled labour, which pushed maintenance costs up by an average of 15%. In 2022, interest rates rose eight times, from 0.25% to 3.50%, pushing most mortgages up dramatically. Over the years, licensing conditions have imposed greater costs and demands on landlords, most of which have been reflected in higher rents.

In the near future, landlords will face increased agency fees to offset the loss in renewal fees and/or the extra workload caused by the Act. In a few years, Minimum Energy Efficiency Standard (MEES) will impose extra expenditures on many properties. Maintenance costs will increase with the Decent Homes Standard or pets in lets.

Most importantly, rents must follow house prices. In a free market, higher property prices mean higher mortgages, hence higher rents to keep a consistent return on investment over time.

Any of the above can push rents up independently. In a free market, a landlord could increase the rent to absorb the surge in costs and stabilise their income. If tenants systematically challenge rent increases, this will no longer be possible.

Will rents stagnate?

The Rental Market Five-Year Forecast by Savills predicts a 12% increase in UK rents by 2030. This is definitely a slower surge than the past five years, and it brings the market back to normal conditions. The RRA 2025 is only mentioned to the extent that it could affect the number of available properties. It assumes that rents will adjust naturally, as in an open market.

Although rents are not frozen or capped as they were in Scotland,  challenging rent increases freezes them in practice. The magnitude of it depends on various factors:

• If only a few tenants challenge their rents, only a minority of increases will be stopped, and market rents will probably rise as usual.
• If most tenants challenge rent increases, market rents might simply stagnate. The government has pledged to ensure tenants are aware of their rights and to encourage such behaviour. 
• Judges may take different views on what constitutes “open market rent.” Will they consider advertised rents or effective rents, such as those published by the Valuation Office Agency? Will they take inflation into account? Will they analyse rents case by case, having consideration of property particulars like letting agents do? If they only use rental averages, for instance, fancy properties will no longer be viable to rent.
• More concerning are cost increases that push rents up. Will judges consider material considerations, such as energy efficiency improvements to allow for higher rents (https://tinyurl.com/46jd6xtw), as they should? What about interest rate hikes or licensing-related investments? Nothing in the Act seems to allow judges to make reasonable adjustments to the open market rent.
• Last but not least, the delay in sanctioning rents will create a lag in the market. If judges take 12 months to confirm a new rent, it will be a year too late for landlords who need to recover their costs.

Rent stagnation in practice: Assuming inflation is 5%. A landlord increases their rent from £2,000 to £2,100 in Aug'26 and gets challenged by their tenant. If the courts take 12 months to sanction, the new rent of £2,100 will be effective in Aug'27. The landlord can only increase again in Aug'28. Says they ask for £2,205 then (£2,100 + 5% inflation) and get challenged again, the new rent might be sanctioned in Aug'29 at £2,205. In Aug'29, the landlord should receive £2,431 in rent if allowed to increase by 5% a year. However, they get less than half of it.

Comparison with Scotland

The Housing (Scotland) Act 2025 only affects properties in a Rent Control Area. It applies to rent increases for existing tenancies or changes of tenancies, but excludes new ones. Initial rents are not controlled, and any new investment can command a high rent without problem. It also caps rent increases at 1% above the CPI, allowing for rent adjustments to follow house prices. Last but not least, it provides for exemptions in certain circumstances (yet to be determined), which are likely to include property improvements. This could lead to increases due to work related to higher energy-efficiency requirements or licensing conditions.

In comparison, the RRA 2025 is much stricter. It applies to all properties and to all tenancies, old and new. A property bought today costs more than a property bought ten years ago, but the rent they can charge is the same. Likewise, fancy properties will be assessed through the same average rents, so they won't command higher rents to reflect greater investments or premium building materials. Standardisation of properties will ensue, reducing tenants' choice.

In practice, the RRA 2025 might prove to operate like a blanket ban on rent increases. If house prices go up, rents might lag behind, stifling potential growth in the sector and forcing more landlords out.

Where is the market going?

Landlords forced to keep rents unchanged when facing rising costs will absorb the loss if they can, or be pushed to sell. Many casual landlords are already leaving en masse.

A continuous exodus of landlords will accentuate the supply squeeze. Commentators are quick to say “rents will rise as a consequence of the shortage of available properties”. What if they can’t? What if the supply in the rental market continues to dwindle, leaving only a few properties available?

For landlords, my advice is simple: keep a margin for manoeuvring, and invest only if you can absorb cost increases without raising the rent.

Boris Drappier

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