A Modern System for Fair Rents: How to Make Private Renting Affordable (NEF, 2026)

Summary

"A modern system for fair rents: How to make private renting affordable" (May 2026) is a working paper by George Bangham, Grace Brown, Molly Harris, and Jaya Sood of the New Economics Foundation (NEF), hosted publicly on thinkhouse.org.uk.[1] It analyses why England's private rented sector (PRS) has become structurally unaffordable and proposes a "fair rents" system of national rent controls, alongside tenure-security, enforcement, and tax reforms. The wiki fetched and read the full 50-page PDF directly.

The paper's core historical argument sits squarely within this wiki's rentier-economics territory even though its policy prescription — rent controls — is a price-regulation approach rather than a land-value-capture one (see Limits below): it argues that the Housing Act 1988's removal of tenure security and rent-price controls, combined with the 1996 introduction of buy-to-let mortgages, created "an investable asset class for landlords" that has since let them "extract scarcity rents" from tenants, i.e. monopoly returns arising from local housing scarcity rather than from any productive contribution by the landlord.

Key Historical Claims and Figures

• Deregulation timeline. The Housing Act 1988 removed rent-price controls and introduced no-fault (section 21) evictions for new tenancies; the market for buy-to-let mortgages launched in September 1996, giving landlords access to a rapidly growing pool of bank mortgage credit. The PRS's share of English households nearly doubled from 10.8% (2003) to 19.4% (2013–14), overtaking social-rented housing for the first time in decades.
• Structural, not just post-pandemic, unaffordability. The paper argues post-pandemic rent spikes (6–9% annual growth nationally) are "a reversion to a 30-year average level of housing costs," not a new phenomenon — the biggest rent-to-income shifts happened in the 1980s–90s. The lowest-income fifth of UK private renters spent a median 48.5% of household net income on housing costs in 2024–25 DWP data.
• A landlord-to-tenant transfer. The paper frames unaffordable rent increases explicitly as an "upward redistribution of income" (Section 2.3): private renters spend an average 34% of income on rent versus 19% for mortgage holders on repayments, and landlords — as either asset-holding individuals or institutional investors — have a lower marginal propensity to consume than the renters paying them, giving the transfer a contractionary macroeconomic effect in a demand-constrained economy. £73 billion has been paid to overseas owners of UK property in rent since 1987 (including commercial rent), which the paper treats as a further economic leakage.
• Fiscal exposure to landlords. The paper states more than a third (34.5%, £13.4bn) of the £38.8bn the UK's Department for Work and Pensions expects to spend on housing benefits in 2026–27 will flow directly to private landlords, and cites a proposal to extend national-insurance contributions to rental income (currently exempt) as a "static" revenue source of up to £3.2bn, framed explicitly as closing an "unwarranted tax exemption."
• Policy proposal. A phased "fair rents" system: an immediate rent-rise cap (CPI or 2%, whichever is lower, including between tenancies), an expanded national rental-price database, devolved powers for city-region mayors to declare local rent-control pilots, and eventual convergence to a national rent-control regime — modeled partly on Ireland's Rent Pressure Zones and Spain's 2023 Housing Act, with acknowledged cautionary lessons from Scotland's 2022–24 rent freeze (which caused disorderly landlord exit because it capped only sitting-tenancy rents, not between-tenancy resets).

How This Bears on the Wiki's Existing Claims

This report corroborates, with fresh UK data, the account already carried on this wiki via Financialization of Land and Housing and Ryan-Collins, Lloyd & Macfarlane's Rethinking the Economics of Land and Housing — that 1980s–90s credit and tenancy deregulation, not a simple failure to build enough housing, is a primary driver of the UK housing-cost crisis discussed on the United Kingdom place page. It also extends Christophers's Rentier Capitalism thesis with a concrete UK-specific mechanism (buy-to-let mortgage credit plus the 1988 tenure/price deregulation) for how landlords came to extract "scarcity rents," and sits alongside August's Canadian financialized-landlord study as a second national case of rentierized rental housing, though the UK story here centers on individual/buy-to-let landlordism rather than REITs specifically.

Limits and Honest Assessment

This is an advocacy working paper from a self-described progressive think tank, not a peer-reviewed academic study — NEF is transparent about its policy position throughout (the paper opens by proposing a named policy programme, not a neutral literature review), and its case-study selection favors jurisdictions (Ireland, Spain, Vienna) where rent controls are argued to have worked, while treating the standard economist critique of rent control — that price ceilings on rent tend to reduce the quantity and/or quality of rental housing supplied over time — mainly through the two examples (San Francisco, Sweden) its critics cite, arguing these reflect design flaws (uneven application, insufficient accompanying housebuilding) rather than a general problem with price controls. Independently reading the two most-cited quasi-experimental studies on the skeptical side shows they present a real, only partly answered challenge to NEF's design-flaw framing.[2][3] Autor, Palmer & Pathak's study of Cambridge, Massachusetts's 1995 rent-decontrol found ending a comprehensive, decades-long rent-control regime raised the value of never-controlled housing at the sample's mean level of nearby rent-control exposure (34% of units within 0.2 miles) by roughly 12% relative to houses with no controlled neighbors, and raised the assessed values of directly decontrolled units by 18–25%, adding roughly $1.8 billion — about a quarter of the area's residential price appreciation — to Cambridge's housing stock between 1994 and 2004; the authors attribute most of this to improved neighborhood amenities and reduced tenant-housing mismatch rather than new investment, and conclude "the efficiency cost of Cambridge's rent control policy was large relative to the size of the transfer to renters," a finding that does not hinge on the kind of implementation flaw (uneven application, insufficient housebuilding) NEF cites, since Cambridge's controls were comprehensive and long-running. Diamond, McQuade & Qian's study of San Francisco's 1994 rent-control expansion found covered tenants were 10–20% more likely to remain at their address in the medium-to-long term (helping prevent displacement, especially of racial minorities), but that landlords responded by converting or redeveloping buildings to escape the law, shrinking rental housing supply in treated buildings by 15% — a response the authors argue drove up rents for future tenants and contributed to gentrification, "the exact opposite of the policy's intended goal." San Francisco's landlord-exit channel does depend on a specific design feature (new construction and converted units were exempt from control), giving NEF's design-flaw reply some real purchase there; Cambridge's result offers no comparable design-flaw opening, so this page treats the skeptical literature as a genuine, unresolved objection to NEF's framing rather than one NEF's own treatment has adequately answered.

A Georgist framing note: the paper's own preferred remedy — price controls on rent plus expanded state/community acquisition of rental housing — targets the symptom (the price tenants pay) rather than capturing the land rent directly the way an LVT would. The paper's own Step 4 (extending national-insurance contributions to rental income) is the closest point of contact with the wiki's usual land-rent-capture framework, and it treats this as a minor, secondary reform rather than a central mechanism. Readers using this page as ammunition for a Georgist argument should note that "unaffordable rents are a transfer from landlords to tenants" (Section 2.3) is the paper's strongest Georgist-adjacent claim; the rent-control apparatus that follows from it is a different policy family from land-value taxation, with its own separate and more contested evidence base.

See Also

• New Economics Foundation — the publishing organisation
• Financialization of Land and Housing
• Rentier Capitalism (Christophers, 2020)
• The Financialization of Canadian Multi-Family Rental Housing (August, 2020)
• United Kingdom
• Rethinking the Economics of Land and Housing (book page)

Sources

1. George Bangham, Grace Brown, Molly Harris & Jaya Sood (2026), "A modern system for fair rents: How to make private renting affordable," New Economics Foundation, published May 2026 — used for all historical claims, figures, and policy proposals above; fetched and read in full (50 pages) from the hosted PDF. thinkhouse.org.uk/site/assets/files/3393/nef0526.pdf.
2. David H. Autor, Christopher J. Palmer & Parag A. Pathak (2014), "Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts," Journal of Political Economy 122(3), 661–717 (NBER Working Paper No. 18125, June 2012 draft) — used for the Cambridge decontrol price-spillover and efficiency-cost findings in the Limits section above (B-claim; peer-reviewed quasi-experimental study, read directly 2026-08-12). nber.org/system/files/working_papers/w18125/w18125.pdf.
3. Rebecca Diamond, Tim McQuade & Franklin Qian (2019), "The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco," American Economic Review 109(9), 3365–3394 (NBER Working Paper No. 24181; working-paper draft dated March 4, 2019) — used for the San Francisco supply-reduction, tenant-mobility, and gentrification findings in the Limits section above (B-claim; peer-reviewed quasi-experimental study, read directly 2026-08-12). web.stanford.edu/~diamondr/DMQ.pdf.