The government has firmly rejected the introduction of rent controls, with Housing Minister Steve Reed stating they are not under consideration. This declaration comes despite recent remarks from Shadow Chancellor Rachel Reeves, who indicated that Labour would be exploring measures to stabilise rental costs should they come to power. The contrasting positions highlight the ongoing political debate surrounding the UK's housing market, which continues to be characterised by high prices and challenging affordability.
The current housing landscape remains complex. Recent data from Nationwide building society indicated a modest 0.4% month-on-month fall in UK house prices in May, bringing the average price to £289,890. Annually, prices were up by 1.3%. However, the picture is not uniform across the country. According to property portals like Rightmove and Zoopla, some regions continue to see robust demand, while others experience more subdued activity. For instance, northern regions have generally shown stronger price growth compared to parts of the south.
Mortgage rates continue to play a significant role in affordability for potential homeowners. While rates have eased from their peaks in late 2022, they remain considerably higher than the historically low levels seen in the preceding decade. This elevation in borrowing costs, coupled with high house prices, presents a significant barrier for many first-time buyers and those looking to move up the property ladder. The average interest rate for a two-year fixed mortgage remains above 5%, impacting monthly repayments.
The rental market, which has been the subject of Rachel Reeves' comments, continues to experience significant pressure. Data from sources like Rightmove consistently shows annual rental growth in double digits across many parts of the UK, driven by an imbalance between supply and demand. Average asking rents outside London reached a new record of £1,280 per calendar month in the first quarter of 2024, an increase of 8.5% year-on-year. London's average asking rents stood at £2,633 per calendar month, up 5.3% annually, according to Rightmove data.
The government's rejection of rent controls aligns with its long-held view that such measures could stifle investment in the rental sector and potentially reduce the supply of available properties. Proponents of rent controls, however, argue they are necessary to protect tenants from excessive increases and provide greater stability in household budgets, particularly during a cost-of-living crisis.