Two thirds of Generation Rent supporters who didn’t move home in 2023 were asked to pay a higher rent last year.

From Dan Wilson Craw, Deputy Chief Executive, Generation Rent

Renters have never faced such an enormous crisis. Since the end of the pandemic, more of us want to live in cities, and because of the lack of homes that have been built in recent decades, competition for those that are available is pushing up rents. Since March 2021, the average rent on a new tenancy in the UK has increased by 33%, while wages have increased by just 19%.

Many of us who have tried finding a new place to live in the past couple of years have encountered horrendous exploitation at the hands of letting agents trying to wring every last drop of extra rent from the overheated market. Being asked to bid against other renters or offer multiple months’ rent up front is now commonplace. This wastes renters’ time and throws up barriers to those of us without savings.

The worst-hit by this crisis are those of us who rely on the benefits system to pay our rent – or are on low pay and don’t qualify for Universal Credit or similar support. It is impossible to offer similar sums to other renters, so these renters are turning to councils for often meagre homelessness support. While Local Housing Allowance was increased in April, this fails to cover the full increase in rents on new tenancies.

It’s not just the lack of new homes that is causing this problem: a failure to build social homes while they continue to disappear because of Right to Buy has left desperate families, outbid by more fortunate renters, taking squalid and overcrowded accommodation.

Young adults trying to start a career in a city are being turned away by landlords and letting agents and forced back to their parents’ homes, missing out on valuable opportunities at a pivotal time in their lives.

This isn’t just affecting those of us trying to find a new place to live. Landlords seeing rents on new tenancies rising can easily ask their existing tenants to pay more – they can threaten a Section 21 eviction as an alternative. The landlord needs no reason to evict their tenant, so you have a choice of paying up, or trying to find a new home you can afford. Two thirds of Generation Rent supporters who didn’t move home in 2023 were asked to pay a higher rent last year.

Under the Renters (Reform) Bill, which collapsed in the dying days of the last Parliament, the abolition of Section 21 evictions would remove landlords’ leverage over tenants when they wanted to raise the rent. Instead, tenants who disagreed with a rent increase could challenge it at a tribunal. This process exists already but just isn’t used because Section 21 trumps everything.

However, any tenant doing this would be taking a risk: the tribunal uses rents for similar properties advertised on Rightmove and Zoopla as the benchmark when determining the rent – not what is necessarily affordable for the tenant.

That means when rents on new tenancies are rising more quickly than wages, landlords could still use rent hikes as an alternative to Section 21.

Scotland abolished their equivalent of Section 21 in 2017, so have had a similar system for several years. In autumn 2022, the post-pandemic increase in rents meant a threat to thousands of renters of 30% rent increases awarded by rent officers and the tribunal. This prompted the government in Edinburgh to freeze rents within tenancies, a policy later relaxed to allow 3% rises in most cases.

This undoubtedly saved many families from the pain of finding a new home at a time when rents were shooting up, but because the legislation was brought in amid the emergency of the cost of living crisis, it was forced to end in March 2024. The government brought in transitional arrangements for rent assessments to prevent particularly egregious rent increases, but the cap is 12% – still much higher in one go than most households’ wages have increased.

The Scottish Government is legislating to bring in a long-term system of rent control, limiting rent increases between tenancies, as well as within them. This additional layer of regulation is intended to allow tenants whose circumstances change move to a different home, without facing the cliff edge of a much higher rent on a new tenancy.

Back in England, the Conservatives, Liberal Democrats, Greens and Labour have all committed to abolishing Section 21 in their manifestos. Only the Greens and Labour mention action on rents. The Greens would give local authorities rent control powers, though it is not clear how these would be designed.

Labour would empower tenants to challenge unreasonable rent rises – but there is a huge question of what would constitute “unreasonable”. Surely, rent the tenant could not afford to pay, i.e. because their income had risen at a lower rate, would count – but it would be incredibly concerning if Labour’s commitment was simply to allow the existing tribunal system to step in once Section 21 goes, leaving the landlord’s “finger-in-the-air” market rent as this benchmark instead.

What would be fairer, and prevent renters needing to go through the extra bureaucracy of challenging rents, would be to place an annual limit on how much a landlord could raise the rent by, to the lower of wage growth or consumer price inflation. This would keep rents in line with affordability.

Generation Rent analysis has shown that without more supply average actual rents (as opposed to rents on new tenancies) broadly track wages anyway, so this should be acceptable to landlords anyway.

Since launching the manifesto, Labour has gone a step further by promising to ban bidding wars. As Sky News reported, Labour had tried to amend the Renters (Reform) Bill to make landlords “advertise a single rent figure in advance and be prevented from creating or encouraging bids that exceed that price.” Once banned, this could be enforced in the same way the ban on letting agent fees is.

So it’s not by any means “rent control” because ultimately landlords would set the rent when they advertise a property. And it would only tackle one symptom of the overall shortage of homes which is creating a “seller’s market” that invites this exploitation in the first place. But it would stamp out the worst profiteering by letting agents, and give tenants assurance that a property that looks affordable will be worth applying for.

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