Mark Stückliln
Rent controls might sound like a clever way to keep housing affordable, but when put into practice, they often achieve the opposite. France and Spain are two of the latest examples showing how the policy backfires—hurting tenants in the long run while hollowing out rental supply.
Faulty foundations in France
In France, where rent controls have been in place since 2019 in high-demand areas like Paris, the system is coming under growing criticism—not just from landlords, but from legal and statistical experts too. The Union Nationale des Propriétaires Immobiliers (UNPI) argues that the whole policy is based on a flawed formula. The reference rent used to cap rental prices—meant to reflect market conditions—is distorted by the inclusion of below-market figures like subsidised rents and frozen rents on homes with poor energy ratings. According to the UNPI, if you stripped these out and based the calculation only on “free-market” rentals, the reference rent would be 20% higher.
Critics also point out that the current approach pushes all rents down, not just limits excessive increases. In doing so, it disincentivises investment, discourages renovation, and ultimately leads to a smaller pool of available rental properties.
Proponents like the Paris city council brush these concerns aside as statistically insignificant. But whether it’s 1% or 10%, if the data feeding the rent caps is misleading, the policy won’t deliver sound outcomes. And landlords—especially small ones who form the backbone of the private rental market—are quick to vote with their feet when regulation turns against them.
Barcelona’s failed experiment
We’ve seen a similar dynamic play out in Barcelona. Rent controls were reintroduced in early 2024 with great fanfare, supposedly to protect tenants in “strained” housing markets. But after a year of implementation, the numbers told a now-familiar story: official rents appeared to stagnate or decline slightly, but asking rents (those on new listings) surged. Meanwhile, the number of new rental contracts plummeted. In other words, the lucky few tenants with existing contracts benefited, but newcomers to the market—usually younger, less well-off renters—found themselves locked out entirely.
The data strongly suggested that landlords either withdrew from the market or shifted to seasonal lets and under-the-table deals. The result? A shrinking pool of legal, long-term rentals and a growing black market. All predictable, and all repeated history.
Why rent controls fail wherever they’re tried
Rent controls are politically tempting but economically corrosive. They sound good on paper—who doesn’t want cheaper rent?—but they ignore the basics of supply and demand. By capping returns, they discourage investment in rental housing and renovations, leading to older, worse-quality stock over time. They shift power to sitting tenants, often the most affluent ones, while driving less privileged renters to the margins.
When you distort price signals in the market, you don’t solve scarcity—you make it worse. And worse yet, the longer rent controls are in place, the harder it becomes to unwind them, as expectations harden and supply keeps eroding.
Better ideas do exist
Rather than freeze rents, policymakers should focus on growing the supply of decent, energy-efficient rental homes. That means cutting red tape, streamlining planning, encouraging renovation with tax incentives or bonuses (as some French landlord groups have suggested), and targeting aid to renters who genuinely need it—not trying to micromanage an entire market with blunt instruments and bad data.
The lesson from Paris and Barcelona is clear: rent control is not housing policy—it’s housing theatre. And the audience is getting restless.
