The policy is back in favour with progressives, but critics say it benefits only existing tenants and saps investment

New York’s mayor Zohran Mamdani taunted his political opponents last month, posting a photo of himself in a Bronx apartment building cutting an ice cream cake bearing the words “Happy rent freeze!”

The 34-year-old democratic socialist, whose election last year sent shockwaves through the US political establishment, made himself the affordability candidate by pledging a hard pause in a city where almost seven out of 10 households rent.

“You all have helped to build this city. You’ve given stability to this city,” he told tenants after their rents were locked for two years. “It’s time the city brings some stability to you.”

Rent controls, where a government sets price limits on rents or annual rent increases for certain types of housing, tend to be effective in their primary objective. A 2024 review of dozens of studies on the policy published globally between 1967 and 2023 found controls were effective in capping rents.

The quid pro quo, say their critics, is that they increase rents on unregulated properties and reduce the overall supply and quality of housing in the long term.

But rent controls are becoming an ever more tempting lever for politicians to pull, especially in the US, where rental inflation spiked to double figures post-pandemic and younger people are increasingly being priced out of the housing market; the median first-time homebuyer age in the US last year reached a record high of 40. Rents are going up elsewhere as well — in north-east England, for example, rental inflation was 6.3 per cent in the year to June 2026.

Despite a broad consensus among economists that such curbs can often do more harm than good, activists and progressive policymakers argue that not all rent controls are alike — and that if structured correctly, they can benefit hard-pressed families while maintaining a healthy housing market.

Of the 38 members of the OECD club of mostly richer nations, 23 already have some form of rent control. Ireland and Austria widened the scope of existing rules this year. Scotland’s devolved government plans to introduce controls in some areas in 2027 and new UK Prime Minister Andy Burnham has said a rent freeze is among the options he is looking at to reduce living costs — though his new housing secretary, Angela Rayner, later ruled them out.

In practice, rent regulation can encompass a wide range of measures. Outright freezes, such as in New York, tend to be temporary. More enduring limits can apply to existing or new tenancies, or both, and may apply nationwide or be focused on areas of high rental demand.

There are often exemptions, such as for newly built properties, and a variety of yardsticks are used to determine the size of permitted increases.

With the issue back on the agenda, proponents say much can be learnt from best — and worst — practice around the world. From New York to Berlin to Edinburgh, supporters say rent controls should play an increased role in setting the biggest cost most households face. Opponents, including many landlords, are steeling themselves for what they fear will be disruption to the housing market.

Stabilisation: the New York model 

Housing was a core issue in last November’s mayoral election in part because New Yorkers are the most burdened tenants in the US. Despite decades of regulation, new renters in the city spend an average of 40 per cent of their income on rent.

Rent stabilisation — where annual increases are set by a city board based on its assessment of the market, inflation and other variables — is the main mechanism, applying to almost a million units. Households living in rent-stabilised apartments tend to have median incomes lower than overall renter households. Mamdani’s rent freeze applies to these properties.

Advocates believe rent stabilisation has prevented one of the world’s most expensive cities from becoming completely unaffordable. Keeping a lid on rent rises “helps people plan their lives”, argues Samuel Stein, a housing policy analyst at the Community Service Society, which campaigns on behalf of lower-income New Yorkers.

But in the eyes of New York’s powerful real estate sector — US President Donald Trump once went around Brooklyn banging on doors to collect rents — controls are inefficient and destructive.

Rent stabilisation means it is hard to cover rising building operating costs or obtain competitive finance, say landlords, because rents can’t rise in line with inflation. Developers say it disincentivises new construction.

“You can’t afford to dump $100,000 into an apartment [for repairs or maintenance], when rent is only allowed to increase by $178 a month,” says Ann Korchak, president of lobby group Small Property Owners of New York. 

Stuart Boesky, chief executive of affordable housing-focused private equity fund Pembrook Capital, estimates that between 20,000 and 50,000 rent-stabilised units are currently empty.

“When a lease comes up and a tenant decides to leave, the landlord has two decisions,” he says. “He can put money into the property knowing he will [not recoup] it, or he can lock the door.” 

Furthermore, opponents add, rent stabilisation removes incentives to move, resulting in an inefficient allocation of housing. “You might find a set of parents or a widow or widower in a three-bedroom apartment,” says Korchak.

Activists in the tenant movement, and some analysts, dispute claims that regulated rents cause under-investment in existing stock. They cite recent data from the Rent Guidelines Board showing that only about 9 per cent of rent-stabilised buildings are considered to be in distress, where operating expenses outstrip their income. 

To Anisha Steephen, an analyst at progressive think-tank the Roosevelt Institute, rent regulations are a necessary corrective to a skewed housing development market where the steep cost of acquiring a property requires taking on debt that can only be serviced by either hiking rents or churning through tenants.

“In this sense, rent regulation functions as macroprudential policy,” Steephen wrote in a recent paper, putting constraints on the kind of risky leverage that pushes lenders towards crisis, and promising a more human alternative to a system built on “capitalised extraction.”

“Having people forced out so that the real estate industry can make money is a twisted system,” Steephen tells the FT. “We have got our incentives backwards.” 

Activists also say that rent-stabilised units help to redistribute wealth more fairly, as access is not based purely on financial need. For Stein, the relative ease of securing a rent-stabilised apartment compared with getting means-tested social housing is a plus — it means more people who need one end up with one. 

But others counter that a fair system would be dictated by demand, just as housing prices are. “If I can’t afford a home on the Upper East Side, I’m going to go live in the suburbs,” says Zachary Rothken, head of administrative law at Rosenberg Estis. “If you can’t afford it, maybe you live elsewhere.” 

Berlin’s faulty brake

Just over half of all Germans rent their homes, making the country an outlier among developed economies where ownership is more dominant and ensuring that rents are always high on the political agenda.

Nowhere is that more so than in its capital, where about 700,000 households, or a third of the total, spend more than 45 per cent of their income on rent, according to the Berlin Tenants’ Association.

Like several hundred other high-demand areas in Germany, Berlin is subject to the Mietpreisbremse, or rental brake, a 2015 law that applies to new leases, and the Kappungsgrenze, introduced two years earlier, which limits rises on certain types of existing tenancies.

Despite these guardrails, rents have risen almost 70 per cent over the past decade, according to a federal government assessment. An attempt by the Berlin senate to freeze rents for five years was struck down by Germany’s constitutional court in 2021.

Konstantin Kholodilin, an economist at the German Institute for Economic Research (DIW), thinks rent controls have damaged the market. “If you also take long-term effects into account, like declining housing, deteriorating quality, decreasing mobility . . . I’m not so sure [rent control] is a good thing,” he says.

Old contracts with controlled rents encourage people to stay put, reducing market activity, he adds. Worse, many profit by subletting their apartments. There are no official figures on the number of sublets, but the practice is commonplace. 

Annette, a 33-year-old tenant who asked to use a pseudonym owing to her precarious situation, estimates that she and her flatmate are paying almost double the average for rent-controlled apartments in the Kreuzberg area.

She wants to challenge the original tenant, but the pitfalls are obvious. “On the one hand, we don’t want to just take it lying down . . . but on the other, we don’t want to get kicked out of here,” Annette says.

By contrast, Silke, who declined to give her surname, is highly unlikely to move out of the rent-controlled 170 sq metre apartment in the idyllic Köpenick suburb where she lives with her husband.

“You really have to make the idea appealing to people,” she says. “Moving out makes no sense financially, because anything now costs the same amount for less.” 

Wibke Werner, head of the Berlin Tenants’ Association, says abandoning rental control altogether would only worsen the crisis. “As long as the housing market is so tight, we still need the protection,” she says. “And this would have to be improved by significantly reducing exemptions.”

One significant loophole applies to newly built or extended properties. Swenja’s apartment, looking out across the trendy neighbourhood of Friedrichshain, is part of a top floor that was added to an existing building and is thus not subject to rent controls.

“I am pretty sure I pay as much as all the floors under me combined,” jokes Swenja, who also declined to give her surname, of the €1,400 monthly rent. “Living is my luxury,” she adds.

There are efforts afoot to make rent controls more effective. A federal commission of experts will make suggestions on how to improve Germany’s rental market at the end of this year. 

Berlin’s senate has also voted to introduce a rental register, listing the address, size and number of rooms of each flat in Berlin, with the aim of making illegal rentals harder to conceal. 

But ultimately, as in many property hotspots, the long-term solution is more supply. The city’s senate estimates that 100,000 additional units would be needed to adequately house everyone in Berlin.

Scotland and England

Harrison Bott, 29, a PhD student in Glasgow, pays £900 a month, or more than half his income, for his one-bedroom apartment.

He has borrowed several thousand pounds for expenses. “To watch the World Cup, go out for a drink for someone’s birthday, that’s funded by debt,” he says. “If my rent goes up £50 or £100, within six months I’ve got to move out — it’s game over.”

The Scottish National Party (SNP), which runs the devolved government in Edinburgh, is planning to introduce rent control in Scotland in 2027, though Bott fears landlords will rush to raise rents before it comes into effect and thinks a freeze is essential now.

The new regime aims to incorporate lessons learnt from other countries and from Scotland’s previous experiment with rent control, which started in September 2022 and consisted of a six-month freeze followed by a 3 per cent cap on annual increases thereafter.

Those emergency measures, which applied only to existing tenancies and expired at the end of March 2024, were heavily criticised. Rents for new lets leapt by 15 and 14 per cent in Edinburgh and Glasgow respectively in the fourth quarter of 2022 alone, according to trade body Real Estate: UK. 

Danny Pinder, the group’s director of policy, also cites data that shows £700mn worth of institutional build-to-rent schemes in Scotland were paused or withdrawn completely following the 2022 rent controls.

“Clearly something that spooks the market in such a significant way, that pauses that institutional capital coming in and developing, is at odds with the broader ambitions for the housing market,” he says.

The new controls are more precisely calibrated than before; they will apply only to specific areas, last for a maximum term of five years, and limit rent increases for both new and existing tenancies to consumer price inflation plus 1 per cent, up to a 6 per cent maximum. There are some exemptions, for instance properties that are coming to the rental market for the first time.

Many believe Scotland’s proposals could be a test bed for the much larger market in England, should the Burnham government change its position. Existing rent controls were mostly dismantled in the 1980s.

The Institute for Public Policy Research, a think-tank, estimates that 2.4mn households across the UK spend more than 30 per cent of their post-tax income on rent, a level it calls “unaffordable.” The total has risen by 250,000 since 2023. 

The Renters’ Rights Act, which came into force in England in May, enacted a mild form of rent regulation in that landlords can only raise rents once a year and tenants cannot be evicted for challenging those increases at a tribunal.

The IPPR is calling for increases between and within tenancies to be linked to inflation or wage growth, whichever is lower. New-build rental units would be exempt for 10 years.

“The housebuilding market is facing a range of pressures, so we don’t want to hit those returns too much,” says Maya Singer Hobbs, a senior research fellow at IPPR.

The think-tank said carefully designed controls “can minimise leakage, promote mobility, protect quality standards, and incorporate flexibility for landlords”. But the National Residential Landlords Association, a lobby group for the UK’s significant cohort of individual landlords, said controls “only ever result in reduced options for tenants and lower housing standards”.

Sir Sadiq Khan, the Labour mayor of London, has repeatedly called for powers to implement rent caps, which he has said would exempt new build-to-rent homes.

As in New York, there are those who believe the threat of availability falling in response to controls is overhyped. “Landlords aren’t snails,” says Gordon Maloney at tenants’ union Living Rent. “When they leave [the market] they don’t put their house on their back and take it away with them.”

Those exiting the sector either sell to another landlord, which does not affect overall rental supply, he argues, or to an owner-occupier, which “removes precisely one unit from supply and one unit from demand”, he argues.

Some institutional landlords say rent measures that are planned and communicated clearly can be accommodated. “We’ve been operating in rent control environments for a long time,” says Daniel Breeden, a senior managing director at Greystar, one of the world’s largest landlords, citing Amsterdam as an example.

He adds that while housing supply in the Dutch city has been impacted by rent regulation and he would rather that rents were left to market forces, controls are “something we’re comfortable with as long as we know what they are . . . we’re not going to leave the market”.