Labour rules out rent freeze after Rachel Reeves's comments spark market turmoil

Labour has ruled out introducing a temporary rent freeze after speculation emerged following comments by Chancellor Rachel Reeves in the Commons.

The clarification came on April 28 after Ms Reeves declined to dismiss the possibility when questioned by Labour MP Yuan Yang.

Ms Reeves told MPs: "I will do everything in my power and use every lever we have to bear down on the cost of living, including for people in the private rented sector."

Initial reports suggested that 12-month rent controls were being considered as part of measures to offset rising costs linked to the Iran war.

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A Downing Street spokesperson later said: "Just to be completely clear, that is not the approach we will be taking."

The speculation prompted a sharp reaction in financial markets, with property-related stocks falling.

Shares in OSB Group dropped 3.6 per cent following the reports, as Paragon Banking Group also saw its shares fall 2.4 per cent.

Grainger recorded a decline of close to three per cent.

Helen Gordon, chief executive of Grainger, said: "Wherever they have been introduced, they reduce the supply of all types of housing and deter investment into existing housing stock, leading to poorer quality housing."

Ms Gordon said ministers had previously indicated a preference for increasing housing supply through building and planning reform.

Robert Colvile, director of the Centre for Policy Studies, said: "That's because with rent control there is no incentive for landlords to renovate or even repair their properties."

He said historical examples showed rent controls had contributed to declining housing quality and population reductions in some cities.

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Melanie Leech, chief executive of the British Property Federation, said: "There is no surer way for the Government to kill off its ambitions to deliver the new homes we desperately need than well-intentioned but inept knee-jerk Government intervention."

The National Residential Landlords Association said the prospect would damage confidence among landlords and investors.

The organisation said: "It is reckless for this kind of uncertainty to be created in the same week that major reforms already causing concern among landlords come into force."

The Renters' Rights Act is due to come into effect on May 1, introducing new protections for tenants in England.

The National Residential Landlords Association said: "For many, it may be enough to conclude that this is the moment to exit the private rented sector for good."

Housing minister Matthew Pennycook has previously rejected calls for rent controls, citing international examples where such policies have had negative effects on housing markets.

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