The Joseph Rowntree Foundation (JRF) has called for rent controls to be introduced alongside major tax reforms for landlords, arguing the measures could cut rents without triggering a mass sell-off of rental homes.

In a new report, the charity claims renters have faced persistently unaffordable housing costs for more than a decade, with rents continuing to absorb most wage growth despite the Government’s plans to increase housebuilding.

JRF says a system capping rent increases at CPI inflation within tenancies and CPI plus 2% between tenancies could leave renters almost £1,200 a year better off by 2030.

It, however, accepts that rent controls remain controversial because of concerns they could push landlords out of the sector or reduce investment in property standards.

‘Supernormal’ returns

The foundation argues this would be unlikely because most landlords continue to make what it describes as ‘supernormal’ returns on their investments, despite higher interest rates.

Analysis commissioned from the Autonomy Institute found average landlord returns were 6.9% in 2024.

JRF claims this gives the Government scope to constrain rents while making changes to landlord taxation to protect those most exposed to higher borrowing costs.

Mortgage interest

For the more highly leveraged landlords, it proposes reversing Section 24 mortgage interest restrictions, allowing them to once again deduct full mortgage interest costs from tax.

At the same time, it also proposes applying National Insurance Contributions to rental income, on the basis that landlords currently pay a lower effective tax rate than people earning their income through work.

JRF claims these changes would reduce pressure on heavily mortgaged landlords while increasing tax on landlords making the largest profits.