A short history of rent control

Rent control and WWI

Rent control in the UK was first prompted by housing shortages during WWI. The Increase of Rent and Mortgage Interest (War Restrictions) Act 1915 introduced rent control whereby rents were restricted to their August 1914 level. The Act was designed to prevent landlords from profiteering during the war years when demand for housing exceeded supply. Though originally intended as a temporary measure, rent controls continued to apply to certain dwellings until January 1989.

A role in the decline of the private rented sector?

Efforts were made to stimulate the private rented sector by restricting rent control through the Rent Act 1957, which allowed previously controlled rents to be based instead on gross property values. The Rent Act 1965 introduced regulated tenancies with ‘fair rents’ set by independent rent officers and, ultimately, the Housing Act 1988 deregulated  rents on new private sector lettings after 15 January 1989.

The application of rent controls coincided with a decline in the private rented sector. The sector had made up nine-tenths of the housing stock in 1915 but had reduced to one-tenth by 1991. Rent control has been widely identified as a factor in this decline; it is argued that there is a direct correlation between reduced rental returns and reduced investment in the sector. However, several other causes behind the sector’s decline over the period have been identified, including:

• the availability of alternative forms of investment other than rental property; and
• factors making it easier for people to own their own property such as rising real-terms incomes, and the increased availability of mortgages.

Calls for the reintroduction of rent controls

The private rented sector began to grow again after 1989 and is now the second largest tenure in the UK after owner-occupation. Increases in private sector rent levels and a focus on reducing Housing Benefit expenditure has led several commentators to call for the reintroduction of some form of private sector rent control.

Housing policy is a devolved matter. Both Scotland and Northern Ireland are taking action to restrict rent increases in certain circumstances.

For information on more recent debate around the pros and cons of reintroducing rent controls see Library briefing paper: Rent control in the private rented sector (6760).