Rent controls cut home supply

9:04 AM, 26th August 2026, 2 hours ago

Rent controls are likely to reduce the supply of homes available to tenants and push some landlords to leave the market, according to research from the Institute for Fiscal Studies (IFS).

It says that private renters spent an average 28% of their household incomes on housing costs in 2024–25, compared with just over 11% across households generally.

The IFS says evidence from countries including Ireland, Germany and parts of the US, shows controls can lower costs for tenants already living in affected properties, but can also produce unintended consequences.

Its review found landlords became more likely to sell to owner-occupiers or convert properties to other uses where controls were introduced.

Supply falls under controls

IFS report authors Matthew Oulton and Tom Wernham write: “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).”

They added: “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.”

Property quality can fall

The IFS says every study considered in a major 2024 evidence review found that rent controls reduced the supply of homes available to tenants, with some research also finding lower rates of housebuilding.

Evidence from New York found a 36% increase in ‘immediately hazardous’ building code violations following the introduction of controls.

The report says landlords facing restrictions on rent increases may respond by cutting renovation or maintenance spending where there are still plenty of prospective tenants.

Controls can also make it harder for households to move, with tenants potentially remaining in homes that no longer meet their needs because suitable alternatives are difficult to find.

Alternatives to rent controls

The IFS also points to Germany, where controls introduced in 2015 ultimately had no effect on average rents after about a year because of the way exemptions operated.

Research from Oslo also found that some landlords sought other forms of compensation, including extra services from tenants or deposits worth 10 or even 20 months of rent, requirements which largely disappeared after controls were removed.

The report argues that increasing the overall supply of housing through investment or planning reform would tackle the underlying pressure on housing costs more directly.

It also says tax and benefit policy could target financial help more closely at lower-income tenants rather than giving the largest benefit to people who already occupy rent-controlled homes.