Rent Control

Rent control aims to keep housing affordable, protect tenants from sudden rent rises and allow people to remain in their communities. It can take the form of a fixed maximum rent, a cap on annual increases, such as no more than 3% a year, or rules linking increases to inflation.

In the short term, rent control can provide stability and lower costs for existing tenants. Someone in a rent-controlled flat may pay much less than the market rate in a fast-growing city.

Many economists, however, warn of longer-term side effects. Because rents are held below market levels, demand exceeds supply, which can create shortages. Landlords may have less incentive to maintain properties or build new rental housing, some may convert flats to other uses and tenants may stay in homes that no longer suit them because moving would mean paying market rents.

The effects depend on how the rules are designed. Many modern schemes allow moderate increases and exempt new buildings, to protect tenants while reducing the impact on new housing supply.