Interest rate rises and tax changes have had a greater impact on landlord profitability than a two-year rent freeze would have, according to new research from the UCL Institute for Innovation and Public Purpose (IIPP) and the New Economics Foundation (NEF).

Using HMRC data, the researchers modelled the impact of reducing private rents by 10% and 20%. They found that a 10% reduction in rents, equivalent to freezing rents in May 2024, would have made 2.3% of individual landlords unprofitable. By comparison, they estimate that 4.8% of landlords have become unprofitable following higher borrowing costs and tax changes introduced since 2021.

The report also found that landlords without mortgages, who make up the majority of the sector, would continue to generate significant profits under a 20% rent reduction scenario, while mortgaged landlords would remain, on average, more profitable than many other UK businesses.

Dr Beth Stratford, report author at UCL, said: “Our analysis shows that landlords are making much larger profits than other UK businesses, even after recent interest hikes and tax rises.

“Rent controls are one of the few policies that can provide immediate relief to struggling households whilst saving the government billions.”

The report concludes that higher borrowing costs and tax reforms have had a greater impact on landlord finances than rent controls modelled in the research, although the findings are based on hypothetical scenarios rather than proposed Government policy.