Rachel Reeves has suggested that rent caps could be introduced in local areas, but only under the right circumstances.
In an interview with BBC Radio Essex, the shadow chancellor said there might be a case for controlling rent rates in certain local areas, though she emphasised there would not be a “blanket approach”.
The measure would allow local authorities to prevent landlords from raising rents above a set amount each year.
A similar policy introduced in Scotland by Nicola Sturgeon drove landlords out of the market, reduced the housing supply and increased rents.
When asked on the show if she could see some kind of cap on rents, Ms Reeves did not rule out the suggestion.
“Where that has happened, it has not always delivered the results that people might want,” she said.
“I think that should be up to local areas to decide. There may be the case for that in some local areas, but as a blanket approach, I’m not convinced by that.”
Rent controls would diverge from Conservative Party policy, which has firmly opposed the measure.
However, Labour has insisted that rent controls are not its policy "nationally" but has not ruled out giving councils the power to introduce them.
A party spokesman said: “As Rachel Reeves said, she does not believe rent controls are the right approach. While Labour believes action needs to be taken to address extortionate within-tenancy rent rises, rent controls are not national Labour Party policy as we remain mindful of the risk they could pose to the availability of rental properties and the harmful impacts any reduction in supply would have on renters.
“In government, Labour would act where the Conservatives have failed to ensure fairness and security for renters, immediately abolishing section 21, ending tenant bidding wars, and extending Awaab’s Law to the private rented sector.”
Tory MPs warned that Ms Reeve’s support for the “destructive” policy signalled future actions under Labour.
Councils are set to gain powers to double council tax on second homes, and Labour aims to close any loopholes that allow second home owners to avoid council tax.
A report commissioned by Labour proposed rent controls, arguing that payments should not rise faster than local prices or wages.
The policy was recommended by Stephen Cowan, the Labour leader of Hammersmith and Fulham council, in a report suggesting a “double lock” on rent increases, linking them to the lower of local wage growth or inflation.
The report recommended that rents should only increase once a year, with tenants receiving at least four months’ notice.
Labour rejected the recommendation to introduce a cap, with a spokesman admitting that such controls could reduce the supply of rental properties, making it harder for prospective tenants.
Despite evidence suggesting that rent controls tighten supply and push up prices, they remain popular among Labour grandees. Sadiq Khan, Andy Burnham, and Steve Rotheram, the Labour mayors for London, Greater Manchester, and Liverpool, have all called for rent freezes in England to reduce the burden on tenants.
Ms Reeves also said on Friday that Jeremy Corbyn will not be a Labour party candidate in the next general election, despite the strength of feeling in his Islington constituency.
