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The Institute of Economic Research (IEA), a think tank, has published a report criticising rent control, saying it increases rents for new tenants and reduces both the supply and quality of housing.
This makes it harder for renters to find new homes and makes landlords hesitant to buy new properties to increase supply.
The paper was written by Dr Konstantin Khorodilin, a senior research fellow at the German Economic Institute, who analysed 196 studies covering almost 100 countries over a period of 60 years.
He said: “Rent control effectively reduces rents in the controlled sector, but it comes at a high cost.”
“Tenants in rent-controlled housing benefit the most, at least in the short term, while new tenants lose out due to rent control.”
“In the long term, rent control could undermine the rental sector, forcing landlords to repurpose properties and encouraging renters to become homeowners.”
The SNP has previously set the rent cap at 3% per year, but residents north of the border can challenge unfair rent increases.
Mayor of London Sadiq Khan is also in favour of rent control, but his leadership appears to be more cautious about it.
IEA editor-in-chief Dr Christian Niemiec said: “Economist is a notoriously polarising profession: ask three economists and you’ll get four opinions. But there are exceptions to this, and the study of rent control is one of them.”
“This is an area where the empirical evidence overwhelmingly points in the same direction.
“The findings that rent control reduces the supply and quality of rental housing, reduces homebuilding, reduces private tenant mobility, and leads to a misallocation of existing rental housing stock are as close to a consensus as economic research can realistically obtain.”
Ben Toomey, chief executive of tenant campaign group Generation Rent, responded to the paper.
He said: “Among the glaring drawbacks of rent control listed by the IEA is that it ‘forces renters to become homeowners’…Please do that! It’s what many of us want, but rising rents mean we can’t.”
“The briefing also mentions that rent control could reduce ‘residential mobility’. This may be an issue in other countries, but in England the typical tenant stays in their home for less than three years, so allowing them to become more stable and settled would be a welcome change.”
“It has been said that the rent control model does not improve housing quality, or may even make it worse. Currently, around one million privately rented homes do not meet the Decent Housing Standard, and more than one in ten privately rented tenants live in life-threatening danger – all this without rent control. To solve this problem we need regulation that goes beyond rent control.”
“Rent control is not the answer to everything,” he said, adding that more affordable housing needs to be built.
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