Source: Institute of Economic Affairs (2024)
Out of 206 studies reviewed, the majority found rent control reduced supply, worsened affordability, and led to deteriorating housing quality. Rent control shifts costs to landlords and future renters, creating long-term harm to housing markets.
Key Findings: Broad Impacts of Rent Control Across Supply, Mobility, and Quality
Significant Reduction in Housing Supply:
○ Out of 16 studies reviewed on the impact of rent control on supply, 12 found a negative effect, showing that rent control discourages the development of new rental housing and reduces the availability of existing rental units.
Deterioration in Housing Quality:
○ Out of 20 studies focused on housing quality, 15 found negative effects, as rent control discourages landlords from maintaining and upgrading properties due to reduced revenue.
Reduced Mobility and Increased Inefficiencies:
○ Rent control policies reduce tenant mobility, as residents remain in controlled units even when their housing needs change.
○ This stagnation leads to misallocation, where tenants occupy units that are too large or too small while others struggle to find suitable housing.
Discriminatory Market Dynamics:
○ Market distortions caused by rent control can lead to black-market activities (e.g., key money) and increased discrimination against marginalized groups seeking housing.
Increased Rents in Unregulated Units:
○ Out of 17 studies on uncontrolled rents, 14 found a positive effect, meaning rents outside of controlled markets increased due to reduced supply and competition.
Implications for Rent Control:The evidence presented across 196 studies reveals that while rent control achieves lower rents in regulated units, it exacerbates broader housing crises by shrinking supply, deteriorating quality, and creating market distortions. Policymakers are urged to conduct comprehensive cost-benefit analyses before introducing such policies to avoid unintended negative consequences.