More kite flying on capping rents creates new uncertainty for investors
Official data undermines rent cap folly as Burnham yo-yoing creates damaging market uncertainty
More kite flying on capping rents has created new uncertainty for investors at the worst possible time. Analysis of actual Government data by Lauder Teacher Associates shows wages are rising faster than rents which a majority of tenants find “easy” to pay. Meanwhile housebuilding continues to plummet because of rising taxes, regulation and, of course, uncertainty over market intervention.
- MHCLG data published in May shows two thirds of private renters find paying rent very or fairly easy. Just 7% find it very difficult.
- ONS figures for the three months to May show wages rising faster than rents, with London rent inflation the lowest in England at 2.0%.
- England completed 208,000 homes in 2024-25, down 16% from 2020. Build to rent starts fell 80% over 2025 and new taxes add £76,000 to the cost of each home.
- Rent freezes backfired in both Ireland and Scotland. The Scottish Government’s own impact assessment, published in March 2026, concedes the intention to control rents has “impacted on the attractiveness of Scotland as a place to invest in new homes”.
On Monday, Andy Burnham’s legislative plan to tackle the cost of living included rent freezes, according to media briefings. Despite causing needless uncertainty within the sector, there has been no official confirmation either way.
It is a policy – dismissed as “snake oil politics” because of its false promises of improving the market for renters – which has been promoted by Green Party leader Zack Polanski and Zohran Mamdani, who recently swept to victory in New York.
However, analysis of English, Scottish and Irish governments’ own data will raise severe concerns that the political move could ignore economic reality and further undermine the brittle housing market which is at its lowest point since the GFC.
Andrew Teacher, (Pictured) Founding partner of Lauder Teacher Associates, and former spokesman for the British Property Federation, said:
“A rent freeze pretends to solve an affordability problem the data says is easing by worsening the bigger problem we face: getting investors to the table. It is snake oil politics. If we want to deliver new homes and generate economic growth, investment is critical and this in itself will unlock more affordable homes as well as the rentals and first time buyer pads we need. Rent caps sound great on a radio interview but the recent data shows the damage they create for no lasting political or economic gain.
Whilst nothing has been ruled out, this constant yo-yo of uncertainty is itself damaging and enough to spook investors. We have seen over the past decade how kite-flying in the media rocks markets and this kind of schoolboy politics has no place in society. The bitter irony is that encouraging housebuilding is one of the quickest to generate economic growth, an irony deepened by how much Manchester has benefited from this growth during Burnham’s tenure as mayor.
“The government’s own survey, published weeks ago, shows two thirds of renters find paying rent easy, and the latest official figures show wages rising faster than rents. This matters because it shows objectively that the problem is being overplayed and crucially, avoids the proven fact that the proposed solution would make things worse for voters.
MHCLG data: Most tenants say rent is easy to pay, and wages now outpace rents
Analysis by Lauder Teacher Associates of the English Housing Survey 2024-25, published by MHCLG in May this year, shows 68% of private renters describe paying their rent as very or fairly easy and just 7% describe it as very difficult, with the proportion in arrears down to 5% in 2024-25 from 8% in 2019-20.
New data this week shows rents are now rising more slowly than pay. ONS earnings figures show regular pay up 3.4% in the three months to May 2026 and total pay up 4.4% in the latest quarter, against ONS private rent inflation of 3.3% across the UK and 2.0% in London in the 12 months to May 2026, the lowest of any English region and a real-terms fall.
| Annual growth (latest ONS) | Rate |
| Total pay, GB, incl. bonuses (to April 2026) | 4.4% |
| Regular pay, GB (to May 2026) | 3.4% |
| Private rents, UK (to May 2026) | 3.3% |
| Private rents, London (to May 2026) | 2.0% |
Molior data: Housebuilding has stalled across England
Experts believe more uncertainty will make recent shocking data around slower housing starts even worse. England completed 208,000 homes in 2024-25, down 16% from the 2020 peak, according to industry body HBF, and Centre for Policy Studies analysis of official data. Every English region started fewer homes in 2024-25 than the year before.
It has been most acute in London – given its focus on high-rise apartment blocks – caused in no small part by knee-jerk responses to building safety rules introduced by Michael Gove during the Conservative administration. Further confusion and additional rules over second staircases by the London mayor have also compounded issues, despite a lack of evidence that new-build schemes are at risk of major fires, a point many companies are afraid to make.
Molior’s Residential Development in London research, released this week, for the second quarter of 2026 records 2,876 private construction starts against the 22,000 a quarter needed to hit London’s 88,000-home annual target, a rate of 13%, with work halted at 56 sites containing 3,913 part-built homes.
Ironically, given the discussion around rent caps, the one part of the market that was still delivering at scale, build to rent (purpose-built rental blocks funded by institutional investors), has itself contracted sharply because of all the above uncertainty making ground-up development impossible: analysis by the British Property Federation and Savills, published in January 2026, shows London build to rent starts fell from 3,065 in 2024 to 613 in 2025, a fall of 80%, with regional starts down 37% over the same year.
The cause is a rising tax and regulatory burden landing on a market that cannot absorb it, and this is before the increasing costs of financing and construction are considered. HBF’s Viability Crunch research, published in 2026, finds new taxes, levies and policy costs have added up to £76,000 to the cost of building each home over five years, rising to £98,000 for the high-rise apartments rental investors fund. The Building Safety Levy arrives in October 2026 seeking £3.4bn from an industry that had already committed around £6bn to remediation.
It’s a simple point: if Government needs private capital to deliver its policy (of building 1.5m homes), then that capital needs to make a profit. Much of that capital – whether it be LGPS cash such as Greater Manchester Pension Fund (GMPF), a backer of BTR schemes in London and Manchester, or the shareholders of major housebuilders – needs to turn a profit. Without profit there is no delivery.
A rent freeze would further whack business plans and kill remaining viability, hitting institutional capital – such as Burnham’s own GMPF and other local government pension funds. which have been highly active in Burnham’s North West home region. Such funds are doing most of the buying up of existing schemes because of the relatively secure income they throw off. (Molior shows corporate purchasers taking 52% of everything sold in London in the second quarter).
Rental growth assumptions – essential for long term pension fund investors – drive every viability appraisal, so capping them stops schemes that are marginal today from going ahead. This undermines the government’s own housing targets, its pledges on growth (since housebuilding is one of the biggest drivers) as well as other pledges to get Local Government Pension Scheme capital investing more in housing, impact and private markets.
Rent freezes backfired in Scotland and Ireland
Scotland: the cap pushed rents up and investment out
Given the focus on the North, ministers should maybe do well to see what chaos occurred a few miles up the road from Manchester from these same damaging policies. Scotland introduced emergency controls in September 2022, a freeze followed by a 3% cap on in-tenancy increases, and open-market rents accelerated as landlords priced in uncertainty. Citylets, the main Scottish advertised-rent index, recorded double-digit annual growth in advertised rents through 2023 during the cap, reaching 17% in Edinburgh and 16% in Glasgow in the third quarter of that year. Within months of the cap around £700m of build to rent investment was paused or withdrawn, and the British Property Federation identified £2.5bn of build to rent investment at risk of leaving Scotland entirely.
The Housing (Scotland) Act 2025 now provides for permanent rent control areas, and the Scottish Government’s own impact assessment, published in March 2026, concedes the intention to control rents has “impacted on the attractiveness of Scotland as a place to invest in new homes”. Scottish ministers are now consulting on exempting build to rent and student housing to win that capital back.
Ireland: a 91% collapse in funding, then a reversal
Ireland capped rent increases in its pressure zones at 2%, and private rented sector investment fell from €1.8bn in 2021 to €166m in 2024, with Dublin apartment completions down 27% between 2023 and 2024, according to analysis by Dublin law firm Mason Hayes & Curran. In June 2025 the Irish government exempted new-build apartments from its own cap, linked them to CPI and allowed rents to reset to market between tenancies, explicitly to bring development funding back.
Andrew Teacher, co-founder at Lauder Teacher, added:
“Housebuilding has stalled to record lows across England. Builders warned this would happen when Michael Gove was housing secretary, introducing punitive levies and unworkable regulation. They were ignored and the proof is now in the data. If we’re serious about Manchesterism then we need a level of pragmatism that offers investors certainty, not a repeat of the chaos seen in Ireland and Scotland.”
Colm Lauder, founding partner of Lauder Teacher Associates, said: “Through considerable work we’ve undertaken across Ireland and Scotland, we’ve seen the damage that can be done, overnight, to a country’s reputation with investors. And this impacts voters because a lack of new capital means supply fails to grow with demand and rents rise. During its cap, advertised rents in Edinburgh and Glasgow rose at double-digit rates – an unprecedented amount. Worse, around £700m of rental investment was paused or withdrawn with around £2.5bn at risk of leaving the country. Dublin ran the same experiment and watched funding fall 91% before exempting new apartments from its own rules. We all agree there’s a housing crisis and we all agree the Treasury alone cannot fund its way out of that crisis. So where is the sense in pricing out investors whose cash we need to fix things? Freeze the income they are buying and the institutional investors, who are the last ones left standing, will simply walk away.”
Official data on ease of payments: most tenants say rent is easy to pay, and wages now outpace rents
English Housing Survey 2024-25, Chapter 2 and annex tables, MHCLG accredited official statistics. Headline findings published 4 December 2025; the survey’s private rented sector overview was published in May 2026.
| Measure (2024-25) | Figure |
| Private renters finding rent very or fairly easy | 67.5% (20.1% very easy, 47.4% fairly easy) |
| Private renters finding rent very difficult | 7.2% |
| All renting households finding rent very or fairly easy | 70.2% |
| Social renters finding rent very or fairly easy | 73.9% |
| Private renters in arrears (current or previous 12 months) | 5%, down from 8% in 2019-20 |
| Private renters with savings | 52%, up from 40% in 2019-20 |
| Rent as share of joint income (incl. housing support) | 40%, down from 46% in 2014-15 |
Decimals are from Annex Table 2.9
| Series and period | Rate | Source |
| Total pay, GB, incl. bonuses, 3 months to April 2026 | 4.4% | ONS Average Weekly Earnings |
| Regular pay, GB, 3 months to May 2026 | 3.4% | ONS Average Weekly Earnings |
| Real regular pay, CPI-adjusted, 3 months to May 2026 | 0.4% | ONS Average Weekly Earnings |
| Private rents, UK, 12 months to May 2026 | 3.3% | ONS Price Index of Private Rents |
| Private rents, London, 12 months to May 2026 | 2.0% (lowest English region) | ONS PIPR |
| Private rents, North East, 12 months to May 2026 | 5.9% (highest English region) | ONS PIPR |
UK rent inflation has slowed in successive ONS readings since December 2025, when 4.0% was the lowest since May 2022. ONS PIPR covers new and existing tenancies together, the broadest official measure. Rent pressure is highest in the North East and lowest in London, so a national freeze mistargets by geography.
