Private rents are now unaffordable for more than 2.4 million households across the UK and that number has risen by more than 250,000 in a single year, research reveals.
That jump in numbers has led the Institute for Public Policy Research (IPPR) to urge the government to bring in a statutory 'double lock' on annual rent rises.
The rent cap would be tied to whichever is lower: wage growth or inflation.
In a report, the IPPR states that without any form of intervention, the number of households in unaffordable private tenancies could reach 2.5 million by the end of the current Parliament.
That would be an increase of 340,000 since 2023/24.
Fair system of rent caps
Dr Maya Singer Hobbs, a senior research fellow at IPPR, said: "Millions of renters are being pushed to the brink by a housing market that simply isn't working for them.
"This is no longer a marginal issue affecting a small group – it is a mainstream cost-of-living crisis hitting working households across the country.
"Without action, things will get worse."
She added: "The current system leaves renters exposed to global shocks and rising costs they have no power to control.
"Government has taken important steps to strengthen renters' rights, but it now needs to go further.
"A fair system of rent caps would rebalance the market, protect households from sharp increases, and ensure that rents grow in line with what people can actually afford."
Most affected are employed
The research also found that three quarters of working-age tenants affected by rising rents are in employment and many don't receive direct housing support.
The IPPR argues that successive global shocks, from soaring inflation to rising interest rates, have been passed directly from landlords to tenants, who can do little to resist a sudden rent rise.
The organisation's proposed 'double lock' mechanism would cap annual rises and prevent rents rising faster than household incomes.
Rents would be cheaper
The think tank says that had the cap been in place since 2020, rents would be around 7% lower by the end of this decade.
That translates to savings of around £850 a year for the average renter in England, and more than £1,700 for those in London.
Around 140,000 fewer households would not be classed as facing unaffordable housing costs.
The IPPR acknowledges that rent caps elsewhere have reduced supply, deterred investment and produced consequences that ultimately harmed renters.
However, it says those outcomes can be avoided with time-limited exemptions for new-build properties to encourage housebuilding or bring new rental stock to the market.
Rent control landscape shifting
The IPPR report lands just as the political landscape around rent control is shifting.
Plaid Cymru has pledged to 'better protect renters' after emerging as the largest single party in the Senedd following the Welsh elections.
Though it doesn't have an outright majority, Plaid wants some form of rent control, and its position mirrors the IPPR model, pledging fair rent-setting by limiting annual increases to the lower of wage growth or CPI inflation.
The Greens’ manifesto called for a rent freeze and Rent Pressure Zones where rents could only be increased when a landlord demonstrates a property improvement.
The prospect of rent controls in Wales has drawn criticism from the National Residential Landlords Association.
Its chief executive, Ben Beadle, said: "Rent controls would be a disaster for renters and the Welsh private rented sector.
"These measures will reduce the supply of private rented accommodation at a time when Wales is suffering from an unprecedented supply crisis."
He added: "Wherever rent controls have been introduced they have failed and, in this case, would not address the root causes of high rents, the spiralling costs investors face, which are passed on to tenants through increased rents."
Rent controls don't work
The managing director of Accommodation for Students, Simon Thompson, said: "Student landlords don't need telling that rent controls would hit returns and force landlords out of the PRS.
"The prospect of frozen yields make mortgaged buy to let portfolios financially unviable and a drop in rented housing supply would see rents rise."
He added: "Scotland is moving next year to localised rent controls and Wales could do with political support but rent controls haven't worked anywhere without hurting renters."
