The findings, published in the Institute for Fiscal Studies (IFS) by researchers Matthew Oulton and Tom Wernham, follow a review of the international evidence on rent controls.

Private renters in the UK spent an average of 28% of household income on rent in 2024-25, against an 11% average across all households. That pressure has pushed rent controls back onto the political agenda. Scotland has already run a temporary cap during the pandemic and plans to devolve permanent capping powers to local authorities. Wales’s governing party has pledged controls in its manifesto. Westminster has so far ruled out extending controls to England.

No UK jurisdiction has live long-run data on rent controls yet, so the IFS review draws on evidence from markets with comparable structures, including Ireland, Germany and several US cities, synthesised via a comprehensive 2024 evidence review by economist Konstantin Kholodilin.

Key findings for the sector

Rents fall for existing tenants, but not always overall. Controlled tenancies do see lower rents than they would otherwise face, redistributing income from landlords to tenants. However, common design features undercut this in practice. Germany’s 2015 rent cap, which exempted certain lettings, had no measurable effect on average rents within a year, as landlords adjusted pricing on uncapped units. In Oslo, some landlords facing rent caps instead demanded non-cash compensation from tenants, including deposits of ten to twenty times monthly rent, a practice that disappeared once controls were lifted.

Rental supply consistently contracts. Every study covered in Kholodilin’s review found reduced rental supply following the introduction of controls, as landlords sold to owner-occupiers or converted properties to commercial use. Evidence from Ireland also links rent controls to reduced rates of new housing construction. The IFS authors see no structural reason the UK market would respond differently.

Property quality tends to decline. With more prospective tenants than available homes, landlords have less incentive to maintain properties. In New York, rent control introduction was followed by a 36% rise in “immediately hazardous” building code violations. Regulatory quality standards can offset this to a degree, but enforcement is costly, and allowing higher rent increases after renovation risks undermining the policy’s core aim.

Tenants move less, and mismatches build up. Reduced mobility is a near-universal finding, driven partly by tenants’ reluctance to give up below-market rents. Research on New York’s rent-controlled stock found growing mismatches between household size and property size - larger families in smaller homes, and vice versa. In San Francisco, some landlords converted rental units into exempt condominium stock, further shrinking the affordable rental pool.

Sale prices often fall alongside rental supply. As landlords exit the sector, increased stock on the sales market can push down purchase prices - a potential upside for renters able to buy, though many will lack the means to do so.

The IFS analysis notes that softer forms of rent control, exemptions for new-build or renovated stock, or temporary rather than permanent caps, can reduce some adverse effects. But these adjustments tend to introduce new distortions (such as inefficient property conversions) or simply blunt the policy’s effectiveness at controlling rents in the first place.

Oulton and Wernham stop short of opposing redistribution toward renters as a policy goal, framing that as a political choice. But they argue rent controls are a costly mechanism for achieving it compared with the alternatives. Their recommendation is instead to address housing costs by tackling undersupply directly, through housebuilding and planning reform, and pursue redistribution to lower-income renters through the tax and benefit system, such as housing support within Universal Credit, rather than through blanket rent caps that benefit all incumbent tenants regardless of income.