Campaigners are calling on the government to allow rents to be capped within tenancies as a key bill returns to the Commons.
More than 30 MPs have backed an amendment to the Renters’ Rights Bill which, if passed, would restrict how much landlords can raise rents on sitting tenants by limiting percentage increases to inflation or average wage growth – whichever is lowest.
The bill, which was first proposed by the Conservatives, promises to abolish Section 21 “no-fault evictions”, the legal mechanism that allows landlords to evict tenants without providing a reason.
Section 21 notices have been identified as a key driver of homelessness by housing charities including Shelter, which says about 500 renters receive a no-fault eviction every day.
However, campaigners have expressed concern that if Section 21 notices are banned, landlords will use other means to evict tenants, including by pricing out tenants with rent hikes.
The most recent statistics by the Office for National Statistics (ONS) showed that English renters paid an average of £1,362 last month, while rent prices in England increased by nearly 10% in the past year.
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UK rent rises were not far behind, growing 9.1% across the year, just below the record-high annual rise of 9.2% in March.
Comparisons have been drawn with other countries in Europe, including the Netherlands, where a rent increase limit of inflation or wage growth plus 1% is in place.
Although there is a measure in the bill that would ban rent increases from being written into contracts to prevent mid-tenancy hikes, critics have pointed out that landlords would still be able to raise rent once a year at the market rate.
Analysis of government figures by housing charity Shelter found England’s private renters paid an extra £473m every month on rent in 2024 – an average of £103 more per month than they were paying in 2023.
The amendment on restricting rent increases has been proposed by Labour MP Paula Barker, a former shadow housing minister who said the change would “help keep renters in their homes”.
It has the support of the RMT and Unison unions, as well as the Renters’ Reform Coalition, which includes major homelessness and housing charities such as Shelter and Crisis.
Ms Barker said the housing crisis needed “immediate action” and that her proposal would prevent landlords from using “unaffordable rent hikes as de facto no-fault evictions”.
“In the long term, building more social and affordable housing will help to address the emergency – but to help renters who are struggling right now, a measure to limit rent rises would stop landlords from using unaffordable rent hikes as de facto no-fault evictions,” she said.
“By preventing landlords from raising the rent for sitting tenants by more than inflation or wage growth, my amendment to the Renters’ Rights Bill would help keep renters in their homes. Which is why I am urging my fellow MPs to support it.”
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Bristol renters face frenzied competition
Other MPs who support Ms Barker’s amendment include Green Party MP Carla Denyer, who has put forward a separate proposal that would set up an independent “living rent” body to establish rules about rent increases between tenancies by taking into account factors such as property type, condition, size and local incomes.
Image: Green Party co-leader Carla Denyer speaks to the media on College Green. Pic: PA
“It’s time to end the scandal of rip-off rents,” the Bristol Central MP said.
“Right now, renters are facing a wild west when it comes to renting a home – and a lack of protection has left them at the mercy of landlords who see tenants as cash cows, not people in need of a home.
“Across Europe, rent controls are a normal part of the private rented sector. The UK is lagging behind, with dire consequences not just for renters but for the economy as a whole.”
A spokesperson for the Ministry of Housing, Communities and Local Government said: “Our Renters’ Rights Bill will strengthen tenants’ rights by banning section 21 ‘no fault’ evictions and while we do not have plans to introduce rent controls, we are taking action to cap rent payable at the start of a tenancy to one month, end unfair bidding wars, and give tenants stronger powers to challenge excessive rent hikes.
“This is alongside boosting supply by building 1.5 million homes as part of our plan for change.”
A larger than expected hike in the energy price cap from October is largely down to higher costs being imposed by the government.
The typical sum households face paying for gas and electricity when using direct debit is to rise by 2% – or £2.93 per month – to £1,755, the energy watchdog Ofgem announced.
The latest bill settlement, covering the final quarter of the year until the next price review takes effect from January, will affect around 20 million households.
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1:57
Bills must rise to pay for energy transition
The discount is set to add £15 to the average annual bill.
It will provide £150 in support to 2.7 million extra people this year, bringing the total number of beneficiaries to six million.
The balance is made up from money needed to upgrade the power network.
Tim Jarvis, director general of markets at Ofgem, said: “While there is still more to do, we are seeing signs of a healthier market. There are more people on fixed tariffs saving themselves money, switching is rising as options for consumers increase, and we’ve seen increases in customer satisfaction, alongside a reduction in complaints.
“While today’s change is below inflation, we know customers might not be feeling it in their pockets. There are things you can do though – consider a fixed tariff as this could save more than £200 against the new cap. Paying by direct debit or smart pay as you go could also save you money.
“In the longer term, we will continue to see fluctuations in our energy prices until we are insulated from volatile international gas markets. That’s why we continue to work with government and the sector to diversify our energy mix to reduce the reliance on markets we do not control.”
The looming price cap lift will leave bills around the same sort of level they were in October last year but it will take hold at a time when overall inflation is higher.
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Inflation has gone up again – this explains why
Food price increases, also partly blamed on government measures such as the national insurance contributions hike imposed on employers, have led the main consumer prices index to a current level of 3.8%.
It is predicted to rise to at least 4% in the coming months, further squeezing household budgets.
Ministers argue that efforts to make the UK less reliant on natural gas, through investment in renewable power sources, will help bring down bills in future.
Energy minister Michael Shanks said: “We know that any price rise is a concern for families. Wholesale gas prices remain 75% above their levels before Russia invaded Ukraine. That is the fossil fuel penalty being paid by families, businesses and our economy.
“That is why the only answer for Britain is this government’s mission to get us off the rollercoaster of fossil fuel prices and onto clean, homegrown power we control, to bring down bills for good.
“At the same time, we are determined to take urgent action to support vulnerable families this winter. That includes expanding the £150 Warm Home Discount to 2.7 million more households and stepping up our overhaul of the energy system to increase protections for customers.”
The small increase in domestic energy bills announced today confirms that prices have stabilised since the ruinous spikes that followed Russia’s invasion of Ukraine, but remain 40% higher than before the war – around 20% in real terms – with little chance of falling in the medium-term.
Any increase in the annual cost of gas and electricity is unwelcome. But, at 2%, it is so marginal that in practice many consumers will not notice it unless they pay close attention to their consumption.
Regulator Ofgem uses a notional figure for “typical” annual consumption of gas and electricity to capture the impact of price change, which shows a £34 increase to £1,755.
At less than £3 a month it’s a small increase that could be wiped out by a warm week in October, doubled by an early cold snap, and only applies to those households that pay a variable rate for their power.
That number is declining as 37% of customers now take advantage of cheaper fixed rate deals that have returned to the market, as well as direct debit payments, options often not available to those struggling most.
Ofgem’s headline number is useful as a guide but what really counts is how much energy you use, and the cap the regulator applies to the underlying unit prices and standing charges.
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Here the maximum chargeable rate for electricity rises from 25.73p per kWh to 26.35p, while the unit cost of gas actually falls, from 6.33p per kWh to 6.26p. Daily standing charges for both increase however, by a total of 7p.
That increase provides an insight into the factors that will determine prices today and in future.
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3:36
Energy price cap rises by 2%
The biggest factor remains the international price of wholesale gas. It was what drove prices north of £4,000 a year after the pipelines to Russia were turned off, and has dragged them back down as Norway and liquid natural gas imported from the US, Australia and Qatar filled the gap.
The long-term solution is to replace reliance on gas with renewable and low-carbon sources of energy but shifting the balance comes with an up-front cost shared by all bill payers. So too is the cost of energy poverty that has soared since 2022.
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1:57
Bills must rise to pay for energy transition
This price cap includes an increase to cover “balancing costs”. These are fees typically paid to renewable generators to stop producing electricity because the national grid can’t always handle the transfer of power from Scotland, where the bulk is produced, to the south, where the lion’s share is consumed.
There is also an increase to cover the expansion of the Warm Homes Discount, a £150 payment extended to 2.7 million people by the government during the tortuous process of withdrawing and then partially re-instating the winter fuel payment to pensioners.
And while the unit price of gas has actually fallen, the daily standing charge, which covers the cost of maintaining the gas network, has risen by 4p, somewhat counterintuitively because we are using less.
While warmer weather and greater efficiency of homes means consumption has fallen, the cost of maintaining the network remains, and has to be shared across fewer units of gas. Expect that trend to be magnified as gas use declines but remains essential to maintaining electricity supply at short notice on a grid dominated by renewables.
Cash-strapped Thames Water has agreed a payment plan with regulators to cover off a record fine that threatened to exacerbate its financial difficulties.
Britain’s biggest supplier was to pay £24.5m of the £122.7m sum by 30 September under the agreement.
Ofwat, which imposed the penalty in May for breaches of its rules over sewage discharges and dividend payments, said the balance would be due once a rescue financing deal was agreed or if it was placed into a special administration regime by the government.
Sky News revealed earlier this month that Steve Reed, the environment secretary, had signed off on the appointment of FTI Consulting to assist with contingency planning for putting Thames into a special administration regime.
It further meant that FTI was the frontrunner to act as the company’s administrator, should Thames fail to secure its private sector bailout.
Sky’s City editor Mark Kleinman said that the deal on the table, that would see Thames’s lenders injecting about £5bn of new capital and writing off roughly £12bn of value across its capital structure, was potentially dependent on Ofwat’s handling of the water firm’s fines.
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Administrator lined up for Thames Water
Thames has argued it needs financial space to guarantee its turnaround.
Thames initially had until 20 August to pay the £122.7m sum, but it requested the agreement of a payment plan.
Ofwat’s deal with Thames only kicks the can down the road.
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The regulator said on Wednesday that it had set a “backstop date” of 31 March 2030 for the remaining penalties.
Thames Water said the fines would not be paid for out of customer bills.
It added: “The company continues to work closely with stakeholders to secure a market-led recapitalisation which delivers for customers and the environment as soon as practicable.”
The agreement was announced as the water watchdog prepares to be abolished under government plans to bolster oversight of the industry.
Lynn Parker, senior director of enforcement at Ofwat, said: “This payment plan continues to hold Thames Water to account for their failures but also recognises the ongoing equity raise and recapitalisation process.
“Our focus remains on ensuring that the company takes the right steps to deliver a turnaround in its operational performance and strengthen its financial resilience to the benefit of customers.”