Press Story

New analysis finds that 2.4 million private renting households have unaffordable rents
Substantial proportion of households with unaffordable rents receive no housing support through the benefits system
IPPR calls for a new system of rent stabilisation to cap excessive increases, linked to whichever is lower: inflation or wage growth

New analysis from IPPR finds that 2.4 million households in the UK’s private rented sector are now facing unaffordable housing costs, with the situation worsening rapidly and set to deteriorate further.

The report finds that over 45 per cent of private renters live in unaffordable housing – an increase of over 250,000 households since 2023/24.

Without intervention, this is going to grow to 2.5 million by the end of the current parliament – an increase of 340,000 since 2023/24.

Despite the scale of the crisis, significant numbers of households receive no direct housing support through the benefit system, and affordability pressures are not confined to just the lowest-income groups. Three quarters of working-age renters with affordability issues are in working households.

The report argues that recent global shocks – from inflation to rising interest rates – have been passed from landlords directly onto renters, who have little ability to absorb or avoid sudden rent increases.

The think tank recommends the government stabilises rents, with annual rent increases limited by a “double lock” linked to whichever is lower: inflation or wage growth.

Analysis suggests that, had such a system been in place since 2020, rents would be around 7 per cent lower by the end of the decade – saving the average renter around £850 per year in England, and over £1,700 in London, and reduce the number of households facing unaffordable rents by 140,000 compared to no intervention.

While historically there have been rent caps that had unintended consequences, such as reduced rental supply, the think tank argues that clever design choices can avoid this. The cap should be accompanied by policies such as time-limited exemptions for new-build properties, to make sure more houses continue to be built and rental properties get added to the market.

Dr Maya Singer Hobbs, 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. 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.”

Deputy Mayor for Housing, Tom Copley, said:

“I welcome this report and IPPR’s push for rent stabilisation and applaud the consideration they’ve given to balancing the twin problems of supply and affordability. The Mayor believes the next step is for Ministers is to devolve the power to cap rent rises so we can tackle these issues in the capital. The evidence clearly shows that Londoners would overwhelmingly back new plans to put a cap on rent increases.

“We have long championed the rights of renters in London, and I am proud of our work so far, including launching our innovative ‘Key Worker Living Rent’ scheme and the Renters Rights Enforcement Fund to ensure renters know their right. We will continue this work with partners and Government, as we work to build a better, fairer London for everyone.”

ENDS

Maya is available for interview

CONTACT

Liam Evans, head of news and media: 07419 365 334 l.evans@ippr.org

NOTES TO EDITORS

Advance copies of the report are available under embargo on request
Unaffordable housing costs are defined as households spending 30 per cent or more of their post-tax, post-benefits income on rent.
The analysis uses microdata from the Family Resources Survey 2023/24, (the latest data at time of publication) alongside the IPPR tax-benefit model to project forward how affordability changes over time under different scenarios, factoring in the latest forecasts from the Office for Budget Responsibility. As such, the headline figure (2.4m households) is a ‘now-cast’ for 2026/27. The forecasts pre-date potential disruption to prices and rents arising from the Iran conflict which could see the numbers increase further.
Rents should be ‘double-locked’, linked to an index of wages and the Consumer Price Index (CPI), applied nationally, both within and between tenancies. The index would be applied as the lowest of a rolling monthly index of the CPI or wages, using an average over the previous 12 months to smooth any spikes. The policy recommendations include time-limited exemptions for new-build accommodation and major renovations on rental properties. It also includes new regulation on short-term lets and reinstating local housing allowance to the 30th percentile.
IPPR (the Institute for Public Policy Research) is the UK’s most influential think tank, with alumni in Downing Street, the cabinet and parliament. We are the practical ideas factory behind many of the current government’s flagship policies, including changes to fiscal rules, the creation of a National Wealth Fund, GB Energy, devolution, and reforms to the NHS. As an independent charity working towards a fairer, greener, and more prosperous society, we have spent almost 40 years creating tangible progressive change - turning bold ideas into common sense realities. www.ippr.org