Foolish crusades against landlords have made housing shortages worse
OVER THE past decade governments have meddled endlessly with rental markets in an attempt to improve life for tenants. It has not worked. Even as overall inflation has fallen, rents have continued to rise stubbornly, and at last count were up by about 5% in a year on average across the rich world. In part, this reflects the delayed impact of inflation, because long-term leases can mean rents take a while to catch up with other prices. But it also shows that many policies aimed at easing pressure in rental markets have been treating the symptoms of the problem rather than the cause. They have thereby ended up making things worse for the people they were meant to help.
Interventions have been widespread. Since 2015 Germany’s “rent brake” has forced new landlords to consult a government index to determine what they can charge. Britain has hit landlords with additional taxes. In 2016 Ireland capped annual rent increases in “rent pressure zones”, meaning anywhere suffering a shortage; since 2021, the cap has been set at inflation or 2%, whichever is lower. Spain limited rent increases in 2023, with particularly strict rules for large landlords. Australia has tried to curb bank lending to property investors. And several American states, including California, New York and Oregon, have tightened the regulation of rents and tenancies.
This article appeared in the Leaders section of the print edition under the headline “Rent, killed”
From the March 22nd 2025 edition
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