Rent Control: Another Failed Idea That Never Dies
15 May 2024
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Housing and Planning
Press Release
Lifestyle Economics
15 November 2024
Harrison Griffiths writes for The Spectator
IEA Communications Officer Harrison Griffiths has written for The Spectator criticising new proposals for a rent cap in England and Wales.
Harrison wrote:
“The key flaw in rent control proposals is always the same, regardless of how far they go. The problem is that they artificially constrain the price system. Prices are not artificial constructs we can just play around with on a whim without consequence; they convey information about real-world constraints.
“This isn’t some niche economic theory. It plays out whenever politicians have the hubris to believe they can just wave a magic wand and make high rents disappear. The consummate case study is Stockholm, where policymakers control rents to keep them at an ‘average level’. In 2022, the average waiting time for an apartment was nine years – and more than 11 years if you’re after a short-term lease. The number of people waiting for a rental property was 775,000.
“When an economic crisis combined with rent controls brought the country to the point where developers were building homes they were unable to sell, Finland abolished its rent controls between 1993 and 1995. Combined with a house building boom that started in 1996, Finland’s rental market became so competitive that landlords began offering loyalty schemes to their tenants.”
Read Harrison’s full piece here.
Harrison wrote:
“The key flaw in rent control proposals is always the same, regardless of how far they go. The problem is that they artificially constrain the price system. Prices are not artificial constructs we can just play around with on a whim without consequence; they convey information about real-world constraints.
“This isn’t some niche economic theory. It plays out whenever politicians have the hubris to believe they can just wave a magic wand and make high rents disappear. The consummate case study is Stockholm, where policymakers control rents to keep them at an ‘average level’. In 2022, the average waiting time for an apartment was nine years – and more than 11 years if you’re after a short-term lease. The number of people waiting for a rental property was 775,000.
“When an economic crisis combined with rent controls brought the country to the point where developers were building homes they were unable to sell, Finland abolished its rent controls between 1993 and 1995. Combined with a house building boom that started in 1996, Finland’s rental market became so competitive that landlords began offering loyalty schemes to their tenants.”
Read Harrison’s full piece here.
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