Cap rent rises in England and Wales, Labour-commissioned report says

<span>A protest on the condition of rented housing in London last year.</span><span>Photograph: Anadolu Agency/Getty Images</span>
A protest on the condition of rented housing in London last year.Photograph: Anadolu Agency/Getty Images

Rent rises should be capped for millions of people struggling to afford soaring rates, according to a landmark report commissioned by Labour.

The leaked proposals recommend a swathe of measures that give breathing room to renters buckling under the cost of living.

The report will put pressure on Keir Starmer, the Labour leader, to do more for renters after he promised to tackle England’s housing crisis if elected as prime minister, in part with a massive programme of housebuilding for social rent.

The stabilisation model proposed by the report’s author, Stephen Cowan, suggests a “double lock” for those renewing their tenancies. This would guarantee that any rise is capped at either consumer price inflation or local wage growth – whichever is lower – across England and Wales.

Starmer’s deputy, Angela Rayner, has also promised to scrap no-fault evictions, as previously promised by the Conservatives but then kicked into the long grass.

But Labour is also cautious about doing anything that could be attacked by the Tories as being too leftwing, and conscious of warnings from experts that rent controls could discourage developers from building new houses and therefore make the crisis worse.

The independent report will disappoint some campaigners, who have called for more action, including rent freezes or limits on rises between tenancies. The report warns such measures could make it harder to find a rental property, pushing prices up further.

Cowan also recommends that rents can only be increased once a year, with tenants receiving at least four months’ notice of any increase. He also believes rent review clauses – which give landlords the scope to raise rents mid-contract – should be banned. Both of these measures, however, are in the government’s renters’ reform bill (albeit with two, not four, months’ notice before a price increase).

Labour has cautiously welcomed the proposals, which were commissioned by Lisa Nandy when she was shadow housing secretary, but the party distanced itself from the findings, saying they do not reflect its official view.

The Guardian understands that the report, led by Cowan, the Labour leader of Hammersmith and Fulham council, will be launched on Wednesday without any shadow cabinet minister attending the event.

In the report, Cowan said that the measures, defined as a “third-generation rent stabilisation” system, were essential to protect people from soaring rents within tenancies and also bolster security for landlords.

Tenants across the UK faced the highest annual increase in rents since records began in 2015 last year, with average monthly rents rising by 9% in the year to February, according to official figures.

The Resolution Foundation thinktank predicts average rents could increase by as much as 13% over the next three years as current high growth in the private rental market works its way through existing tenancies.

Cowan said: “Renters have a right to know that their home will be safe and of good standard. And good landlords have a right to compete in a market where everyone plays by the same rules. These recommendations will enable those things to happen efficiently and quickly.”

Lisa Nandy rejected the idea of rent controls last summer as “a sticking plaster on our deep-seated problems”, despite previously suggesting she was “personally very invested” in allowing local mayors and councils to introduce them.

The Guardian understands that several other Labour frontbenchers had pushed for tougher action, but backed off amid internal concerns about unintended controls on the market.

However, Sadiq Khan, the recently re-elected London mayor, has promised to build 6,000 rent-controlled homes for key workers, with rent capped at a third of the average key worker wage.

Khan and Andy Burnham, the mayor of Greater Manchester, have both previously called for the power to impose rent freezes to help struggling tenants.

In March, Starmer refused to explicitly back rent controls, insisting it was not the party’s national policy. But pressed, while on the mayoral campaign trail last month, on whether he could in future allow Khan to implement controls in London, the Labour leader said: “I can assure you Sadiq and I work very closely together. Sadiq feels very strongly about this … it’s not our policy at the moment.”

A Labour spokesperson said: “While we do believe action needs to be taken to protect renters and rebalance power, rent controls are not Labour party policy as we remain mindful of the risk they could pose to the availability of rental properties and the harmful impacts any reduction in supply would have on renters.

“In government, Labour would act where the Conservatives fail to ensure fairness and security for renters, immediately abolishing section 21, ending tenant bidding wars and extending Awaab’s law to the private rented sector.”

The review, seen by the Guardian, also recommends:

  • An annually updated National Landlords Register which would require landlords to demonstrate compliance with the decent homes standard or face fines and even be subject to a criminal offence.

  • The abolition of no-fault evictions, and “back-door” evictions introduced by the Conservative renters’ reform bill, which may include landlords wishing to move themselves or family members in and landlords wishing to sell a property which Cowan says in the report “shouldn’t be a ground for ending a tenancy”.

  • Measures to discourage landlords from entering the short-term and holiday let market or nightly paid temporary accommodation sector by equalising the tax treatment for all forms of private letting.

  • Policies to ensure that medium-term affordable housing returns to being the second-largest part of the housing sector, to decrease the country’s reliance on the private rental market.

Tom Darling, of the Renters’ Reform Coalition, said: “These appear to be a commonsense set of proposals for reforming the private rented sector.

“It will be critical that, if Labour is to win the general election, it gets on and delivers a package of reforms along these lines – and fast.

“That will deliver security of tenure for renters who, facing an acute and ever-growing renting crisis, have been so badly let down by the government.”