The Joseph Rowntree Foundation has proposed a system of rent controls combined with significant changes to landlord taxation, claiming the dual approach could reduce housing costs for tenants without triggering widespread property sales.
In a report published this week, the charity states that renters have experienced unaffordable housing costs for over a decade, with rent increases continuing to outpace wage growth despite government commitments to expand housing supply.
Proposed rent cap structure
The foundation’s model would limit rent increases to the Consumer Price Index within existing tenancies and CPI plus 2% when properties change hands. According to JRF’s analysis, this structure could save renters approximately £1,200 annually by 2030.
The organisation acknowledges concerns that rent controls could prompt landlords to exit the market or reduce investment in property maintenance and improvements, issues that have complicated similar proposals in other jurisdictions.
Landlord returns and tax changes
JRF argues these concerns are overstated, citing analysis from the Autonomy Institute showing average landlord returns of 6.9% in 2024, which it characterises as above-normal returns despite higher interest rates affecting mortgage costs.
The foundation’s tax proposals include reversing Section 24 mortgage interest restrictions, which would allow landlords to deduct full mortgage interest costs from taxable income. This change would primarily benefit landlords with higher levels of borrowing.
Simultaneously, JRF proposes applying National Insurance Contributions to rental income, arguing that landlords currently face lower effective tax rates than wage earners. The organisation claims this combination would reduce pressure on heavily mortgaged landlords whilst increasing tax obligations for those generating larger profits.
The proposals come as buy-to-let investors increasingly focus on higher-yield strategies in response to regulatory changes and cost pressures in the sector.
Market implications
The foundation’s proposals represent a significant intervention in the private rental sector, which has seen substantial regulatory changes in recent years. The government has already introduced reforms including longer notice periods and restrictions on no-fault evictions.
Industry responses to rent control proposals have historically been mixed, with landlord organisations typically opposing caps on rent increases whilst tenant groups argue they are necessary to address affordability challenges. Recent tribunal cases involving rent levels have highlighted ongoing tensions in the sector.
The JRF report does not indicate whether the government is considering implementing these proposals, and no official response has been issued regarding the recommendations.
