Do rent controls work?

Housing costs in the UK now represent a historically high share of household incomes – on average, over 11% in 2024–25. With private renters facing the highest costs (on average, 28% in 2024–25), policymakers are looking for ways to reduce rents or at least slow their growth.

One option that has been proposed by some political parties and commentators is rent controls. Rent controls would not be new to the UK: they used to be commonplace in England and Wales, at a time when the private rental sector was far smaller than today, but were abolished for new tenancies in 1988. The Scottish Government introduced them temporarily during the COVID-19 pandemic, and plans to introduce permanent local powers to control rents in the future. Plaid Cymru, which now governs Wales, also pledged rent controls in its manifesto. Though some have called for their introduction in England, the new UK government has indicated it does not plan to do so.1 But are rent controls a good idea? 

In a well-functioning and competitive housing market, a cap on rents would result in lower rents for some tenants, but also a range of unintended consequences. Market rents adjust to ensure that the rental properties available to let by landlords are the same as the rental properties tenants want, given the price. If rents were capped below that market level, demand would exceed supply: there would be more households looking to rent properties than landlords willing and able to provide them. Some families would find it harder to secure a rental property that suits their needs. Landlords may respond by finding other ways to cover their costs or by allowing the quality of the property to decline. 

In practice, housing markets are complicated. Properties are often very different from each other, and finding a place to rent can entail substantial costs and uncertainty. These factors affect how competitive housing markets are. The characteristics of a specific market will therefore affect what can be expected from rent caps. 

In this explainer, we highlight some of the key theoretical predictions about rent controls and summarise what empirical research reveals about their effects in practice. Whilst no evidence exists yet from the UK, there is evidence from other countries with roughly similar housing markets, including Ireland, Germany and parts of the US. Research to date, which is summarised by a nearly exhaustive evidence review by Kholodilin (2024), finds that rent controls have indeed caused many of the unintended consequences that theory predicts in a well-functioning market.

What are rent controls? 

Rent controls act to cap how much rent landlords can charge tenants. There is a variety of forms they can take:

• They can cap the level of rents landlords can charge, but more usually they cap the percentage increase to rents landlords can impose.

• Sometimes they only apply within tenancies, and landlords can increase rents as much as they like when their tenants change. In other cases, they also apply between tenancies.

• Often, certain types of rental properties are exempt – for example, new-build properties, or properties that have undergone renovation. 

• They may be permanent, or only in place temporarily. 

As we will discuss, different forms of rent controls may have different benefits and risks.

What is the impact of rent controls on rents? 

The most obvious reason policymakers might be tempted by rent controls is to reduce rents, thereby redistributing towards private renters, in order to meet distributional goals. Private renters, on average, face high and uncertain housing costs, are more likely to be in income poverty and typically have less wealth than homeowners and landlords (Waters and Wernham, 2023).

Rent controls could also improve the welfare of tenants by reducing uncertainty in the housing costs they will face in the future.2 Housing often represents a large proportion of tenants’ expenditure, and it can often be difficult for tenants to move if their rent increases, including because of moving costs and employment or other local links. This means tenants face uncertain and difficult-to-escape cost increases. A rent cap would reduce this uncertainty. But it would also increase uncertainty for their landlords by reducing their ability to respond to an increase in costs.

Empirical research into rent controls in other countries confirms, unsurprisingly, that tenants of rent-controlled properties do generally experience lower rents than they would otherwise have done (Kholodilin, 2024), redistributing resources to those tenants from their landlords.

However, even in respect of this most basic goal, the effect of rent controls can be mixed. Rent controls sometimes exempt particular types of properties, such as new-build homes, or only apply within tenancies while allowing landlords to increase rents between tenancies. These exemptions are intended to alleviate some of the adverse effects of rent controls on housing supply. But where these exemptions have been used, rent controls have sometimes led to some landlords charging higher rents than they otherwise would have. As an example, these effects meant that controls introduced in Germany in 2015 had no effect on average rents after about a year of operation (Breidenbach, Eilers and Fries, 2022).

In addition, in place of raising rents, landlords may request other forms of compensation from tenants. For example, Oust (2018) found that when there was rent control in Oslo, a significant number of adverts for rental properties required the tenant to provide the landlord with extra services such as babysitting or to provide very large deposits (10 or even 20 times the monthly rent). Such requirements all but disappeared following the removal of rent control.3

What is the impact of rent controls on the availability of rental properties?

In a well-functioning housing market, with large numbers of landlords and tenants competing freely, market rents for different types of properties would adjust until supply equalled demand and the investment returns made by landlords were comparable to those available from other investments. That is, if rents were fixed at higher than this market rate, there would be fewer tenants wanting to live in properties of different types than landlords were wanting to offer; and if rents were capped at a level lower than this market rate, there would be more tenants bidding to live in different types of property than landlords were offering, as landlords would start to look at alternative investments.

In practice, there are reasons why housing markets may not be perfectly competitive. Properties are often unique in their location and characteristics, which could give even small-scale landlords some market power. Also, time, costs and uninsurable risks are involved both in moving and in finding new tenants, which may allow rents to be negotiated above a competitive market price. Under some circumstances, this could allow some landlords to make excess profits – income over and above that needed to make it worthwhile to continue to let a property, based on their costs and alternative investment opportunities – leaving some scope for rent controls to reduce rents without decreasing supply. For such excess profits to be sustainable, barriers to entry would have to exist that stopped more landlords from entering the market and thereby reducing profits either by reducing the market rent or by raising purchase prices.

Where rent controls have been introduced, the evidence shows that the supply of rental properties – that is, the number of properties that are rented or available for rent – was reduced by the controls. The controls meant landlords became more likely to exit the market by selling their property to owner-occupiers or by converting it to a business use (Autor, Palmer and Pathak, 2014; Diamond, McQuade and Qian, 2019). All studies considered in Kholodilin’s (2024) review found lower supply of rental properties, and some also found lower rates of housing construction, including in Ireland (Gillespie et al., 2025).

Therefore, while it is theoretically possible in certain conditions for rent caps to be imposed without reducing supply, the international evidence suggests that these conditions are not common. Instead, there is clear evidence from a range of housing markets that, in practice, rent controls reduce supply. There is no clear reason why the UK housing market would be any different, meaning we would also expect UK rent controls to similarly reduce the availability of rental properties. Notably, (1) the main characteristics of the UK housing market are sufficiently similar to those in the countries for which there is evidence on rent controls and (2) there are no particular additional barriers to entry of a kind that would prevent investors from becoming landlords if there were excess profits being made by existing landlords.4

Alongside reducing the supply of rental properties, rent controls often result in a reduction in the sale price of properties (Autor, Palmer and Pathak, 2014). If a sell-off by landlords reduced house purchase prices, tenants with sufficient income and savings could respond by becoming owner-occupiers, and some of them may be better off than before. But many renters would be unable to afford to buy.

Aside from effects on the overall supply of rented properties, there may be an effect on the number of properties that are available on the market at any one time. If rents are capped, more renters are likely to want a property at the going rent than landlords are willing to supply, meaning there would be excess demand. Therefore properties may be snapped up quickly, and unlucky would-be renters may be unable to find a property despite being willing to pay the rent. As we explain later, this affects the allocation of properties, with people likely to find fewer rental properties available on the market that meet their needs and hence be forced into less attractive options such as overcrowding. 

What is the impact of rent controls on the quality of rental properties?

Rent controls can have an effect not only on the number of rental properties supplied and demanded, but on the quality of these properties. Most studies have found rent controls lead to significant declines in property quality (Kholodilin, 2024). For example, Bressler (2026) found a 36% increase in ‘immediately hazardous’ building code violations following the introduction of rent controls in New York (Glaeser and Luttmer, 2003). This is hardly surprising: landlords faced with plenty of would-be tenants may be able to cut back on renovation or maintenance costs without further lowering their rents, recovering some of the profit they would otherwise lose as a result of controls. 

The government could attempt to mitigate or avoid such effects in two potential ways. First, it could regulate housing quality (as it already does to a degree). However, these regulations may be difficult and costly to enforce,5 and are probably better targeted at preventing the most egregious cases of poor-quality housing, rather than broader declines in quality. Of course, landlords may also respond to quality regulation by selling their property. Second, the effects on quality could be mitigated by allowing larger rent increases for properties that have undergone renovations, though that risks reducing the effectiveness of the policy in reducing rents, by giving landlords a way of avoiding controls.

What is the impact of rent controls on where people live?

Properties differ a lot, both in terms of characteristics such as the number of bedrooms and in terms of their location. In a well-functioning market, rents should not only equalise supply and demand, but also ensure properties are efficiently allocated6 so that, for example, if larger families are typically able and willing to pay more for large properties than smaller families, they will outbid the smaller families. 

Most studies of rent controls find that they cause tenants to move less often (Kholodilin, 2024). This may be a good thing if the government wants to reduce the pressure on incumbent tenants to move location when rents rise unexpectedly, or if having long-standing tenants causes positive spillovers on the rest of the community. However, part of the reason tenants move less often when there are rent controls is that, as discussed above, they find it harder to find a new property when they want to move. This is especially true if landlords can reset rents to a higher level in between tenancies, as in these cases tenants will only be able to enjoy below-market rents as long as they stay put.

Consequently, people are more likely to live in housing that does not meet their needs well. For example, families whose children have left home may be less likely to downsize, making it harder for expanding families to move into larger properties and forcing them into overcrowding. Rent controls in New York led to more large families living in smaller properties and vice versa (Diamond, McQuade and Qian, 2019). Rent controls could also cause inefficient allocation of housing along other lines – for example, if people are prevented from moving for work or for access to particular facilities or local amenities. These sorts of effects reduce the welfare of some of the tenants policymakers are seeking to help with rent controls, as well as creating wider economic costs.

If rent controls include exemptions for particular types of property, or for properties that have been renovated, then landlords may convert their properties in inefficient ways to avoid the controls altogether in the long run. For example, controls in San Francisco led some landlords to convert their rental properties into higher-value condominium housing which was exempt from controls, leaving areas less affordable to lower-income tenants (Diamond, McQuade and Qian, 2019). 

Conclusion

In general, whether to redistribute from one group to another is a political choice depending on policymakers’ distributional goals, on which we take no position. Whether that redistribution is worth any wider downsides, such as the ones discussed above, is also a matter of political choice. However, the government should avoid inflicting more efficiency costs than are needed to achieve its goals.

The evidence suggests that, unless UK housing markets differ substantially from those in the countries that have implemented them, rent controls would be a costly way to alleviate pressure on housing costs and support renters. Rent controls might partly achieve policymakers’ distributional aims by decreasing costs for some tenants and reducing tenants’ uncertainty over rents (at the expense of landlords). But the experience of other countries where controls have been introduced suggests other tenants would likely be made worse off by these controls, as more tenants struggle to find homes to meet their needs and the quality of rental homes declines. Lower-income and lower-wealth tenants with less scope to leave the private rented sector are likely to be particularly affected.

In some cases, varying when a rent cap applies – such as allowing exemptions for new builds or allowing landlords to raise rents if they improve the quality of the home – could mitigate some of the common downsides, but will generally worsen other adverse effects (or render the rent controls ineffectual). Similarly, temporary rent controls are likely to have fewer negative effects than permanent rent controls, but would also bring only temporary help to their beneficiaries.

If the government wishes to reduce housing costs, it should address the underlying causes – the most obvious being low supply of housing overall (regardless of tenure) in the places where it is wanted (Drayton, Levell and Sturrock, 2024). This could be achieved through direct investment in housing or reforms to planning regulation.

If the government wishes to redistribute income or wealth to poorer private renters, it would be better to pursue this redistribution through tax and benefit policy. For example, housing support through universal credit transfers resources to low-income renters and provides some insurance against unexpected rent rises, as can alternative payments through devolved benefits powers.

Such policies would also not be costless, and they come with their own unintended consequences, but likely far less severe than those associated with rent controls, especially if these policies were themselves designed effectively. Benefit policies also allow more direct targeting of resources towards low-income households, rather than incumbent renters who – rich or poor – are the main beneficiaries of rent controls. 

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. 

References

Autor, D. H., Palmer, C. J. and Pathak, P. A., 2014. Housing market spillovers: evidence from the end of rent control in Cambridge, Massachusetts. Journal of Political Economy, 122(3), 661–717, https:/doi.org/10.1086/675536. 

Breidenbach, P., Eilers, L. and Fries, J., 2022. Temporal dynamics of rent regulations – the case of the German rent control. Regional Science and Urban Economics, 92, 103737, https:/doi.org/10.1016/j.regsciurbeco.2021.103737.

Bressler, B., 2026. Does strengthening rent control reduce housing quality? Evidence from New York City. Working paper, https://beaubressler.github.io/papers/rent_control_quality/hstpa_investment.pdf.

Diamond, R., McQuade, T. and Qian, F., 2019. The effects of rent control expansion on tenants, landlords, and inequality: evidence from San Francisco. American Economic Review, 109(9), 3365–94,https:/doi.org/10.1257/aer.20181289. 

Drayton, E., Levell, P. and Sturrock, D., 2024. England has a poor record of building homes where they are needed. IFS comment, https://ifs.org.uk/articles/england-has-poor-record-building-homes-where-they-are-needed.

Fama, E. F., 1991. Efficient capital markets: II. Journal of Finance, 46(5), 1575–617, https://doi.org/10.1111/j.1540-6261.1991.tb04636.x.

Garcia, L. and Stratford, B., 2026. The property premium: the nature and trajectory of landlord profits in England. Autonomy Institute report, https://autonomy.work/wp-content/uploads/2026/05/The-Property-Premium_.pdf.

Gillespie, T., Kren, J., Lyons, R. C. and O’Toole, C., 2025. The supply side effects of rent controls: evidence from Ireland. Journal of Housing Economics, 70, 102099, https://doi.org/10.1016/j.jhe.2025.102099.

Glaeser, E. L. and Luttmer, E. F. P., 2003. The misallocation of housing under rent control. American Economic Review, 93(4), 1027–46, https://www.jstor.org/stable/3132277.

Kholodilin, K. A., 2024. Rent control effects through the lens of empirical research: an almost complete review of the literature. Journal of Housing Economics, 63, 101983, https:/doi.org/10.1016/j.jhe.2024.101983. 

Oust, A., 2018. The removal of rent control and its impact on search and mismatching costs: evidence from Oslo. International Journal of Housing Policy, 18(3), 433–53, https://doi.org/10.1080/19491247.2017.1336876.

Waters, T. and Wernham, T., 2023. Housing quality and affordability for lower-income households. IFS report, https://ifs.org.uk/publications/housing-quality-and-affordability-lower-income-households.