In fact, according to the Institute of Economic Affairs (IEA), a free-market think tank, rent controls have led to a decline in all areas.
When applied, they have caused a decline in rental housing supply and quality, a decline in housebuilding rates, a slowdown in tenant mobility and a misallocation of existing properties.
The IEA highlights the recently published meta-study on rent controls over the past 50 years by the Journal of Housing Economics.
Overwhelmingly, the results are negative:
- Out of 16 studies that concentrated specifically on the impact on supply, 12 studies found a negative one.
- Out of 16 studies that concentrated specifically on the impact on housing construction, 11 found a negative one.
- Out of 20 studies that looked at the impact on the quality of rental housing, 15 found a negative one.
- Out of 17 studies that investigated whether rent controls drove up prices elsewhere in the housing market, 14 found that yes, they do.
- Out of 13 studies that looked at whether rent controls caused misallocations of the housing stock by for example preventing downsizing 13 found that they did.
Even the author of the analysis concludes: “Although rent control appears to be very effective in achieving lower rents for families in controlled units, its primary goal, it also results in a number of undesired effects, including among others higher rents for uncontrolled units, lower mobility and reduced residential construction.
“These unintended effects counteract the desired effect thus diminishing the net benefit of rent control.”
It doesn’t get any clearer: rent controls don’t work, and won’t work.
