Evidence from Ireland, Germany and the US suggests rent regulation creates more problems than it solves
The Institute for Fiscal Studies (IFS) has published a review of rent control policies, concluding that the measure is likely to produce a range of adverse outcomes for renters despite its aim of reducing housing costs.
Housing costs in the UK currently account for more than 11% of average household income, with private renters bearing a disproportionate burden at approximately 28% in 2024–25.
Against this backdrop, several political parties have proposed rent controls as a policy response, though the current UK government has said it does not intend to introduce them in England. The Scottish Government has implemented temporary controls and intends to establish permanent local powers, while Plaid Cymru pledged similar measures in Wales.
What the evidence shows
The IFS analysis draws on international research, covering housing markets in Ireland, Germany and parts of the United States. The findings consistently show that rent controls produce outcomes that economic theory would predict in a functioning market: reduced supply, declining quality, and inefficient allocation of properties.
Empirical research confirms that tenants in rent-controlled properties generally pay less than they would otherwise. However, the report cautions that this benefit is not universal. Where controls exempt certain property types — such as new builds — or permit rent resets between tenancies, landlords may charge higher rents than they would have absent any regulation. Controls introduced in Germany in 2015, for instance, had no measurable effect on average rents after approximately one year of operation.
The IFS also notes that landlords may seek compensation through non-monetary means. Research found that during a period of rent control in Oslo, a significant number of rental listings required tenants to provide services such as babysitting, or to pay deposits of up to 20 times the monthly rent — practices that largely disappeared once controls were lifted.
Supply and quality effects
Every study considered found that rent controls reduced the supply of rental properties. Landlords tended to exit the market by selling to owner-occupiers or converting properties to commercial use. Some research also identified lower rates of new housing construction, including in Ireland, where Gillespie et al. (2025) documented this effect.
Property quality also deteriorated under rent controls in most studies reviewed. The IFS cites another research finding a 36% increase in immediately hazardous building code violations following the introduction of rent controls in New York. With more prospective tenants than available properties, landlords face less pressure to invest in maintenance or renovation.
Allocation and mobility
Rent controls consistently reduce tenant mobility, with most studies finding that renters move less frequently under such regimes. While this offers greater stability for existing tenants, it also means that properties are less likely to be occupied by households whose needs best match them. The IFS notes that rent controls in New York resulted in more large families living in smaller properties and vice versa.
Where controls exempt renovated or converted properties, landlords may carry out inefficient conversions to circumvent the rules. In San Francisco, controls led some landlords to convert rental properties into condominium housing exempt from regulation, reducing affordability for lower-income households in those areas.
Policy alternatives
The IFS concludes that if the government's objective is to lower housing costs, addressing underlying supply constraints — through direct investment or planning reform — would be more effective. If the aim is redistribution towards lower-income renters, the report suggests that tax and benefit mechanisms, including housing support through Universal Credit, would achieve that goal with fewer adverse consequences.
"Proposals for rent controls should thus show not only why their benefits are expected to exceed their costs, but also that they would be better at achieving their aims than the other tools policymakers have available to them," the IFS report stated.
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