The introduction of rent controls in the UK could reduce investment in rental property and push landlords to leave the market, the Institute for Fiscal Studies (IFS) has warned.
An analysis of international evidence by the IFS found that rent controls have reduced the supply of rental properties in markets where they have been introduced. Landlords have responded by selling homes to owner occupiers, converting properties to other uses or looking to alternative investments.
The IFS said all studies considered in a 2024 review by Konstantin Kholodilin found a reduction in rental supply, while some also recorded lower levels of housebuilding.
It warned there was "no clear reason why the UK housing market would be any different", meaning controls introduced in the UK could also reduce the availability of rental properties.
Rent controls have returned to the political agenda as households face historically high housing costs. Housing costs represented more than 11% of household incomes on average in 2024 to 2025, rising to 28% among private renters.
The Scottish Government introduced temporary controls during the Covid 19 pandemic and plans to give local authorities permanent powers to control rents. Plaid Cymru has also pledged to introduce rent controls in Wales, while the UK government has indicated it does not plan to introduce the policy in England.
The IFS acknowledged that tenants living in rent controlled properties generally pay less than they otherwise would and can benefit from greater certainty over future housing costs.
However, it said the international evidence suggested controls can create excess demand as more tenants seek properties at controlled rents while fewer landlords are willing to provide them.
Research reviewed by the IFS also found that rent controls can affect investment in existing properties. Most studies found significant declines in property quality following their introduction, which the IFS said could reflect landlords cutting renovation and maintenance spending in response to lower returns.
The effects can extend beyond the rental market. Evidence from other countries suggests rent controls can reduce property sale prices as landlords dispose of homes. While some tenants could subsequently move into homeownership, the IFS warned that many renters would not have sufficient income or savings to buy.
It concluded that rent controls would be a "costly way to alleviate pressure on housing costs and support renters" unless the UK housing market responds substantially differently from markets where controls have already been introduced.
Instead, the IFS said policymakers seeking to bring down housing costs should address the underlying shortage of homes through measures including direct housing investment and planning reform.
It added that tax and benefit policy could provide a more targeted way of supporting lower income private renters.
Paul Rooke, partner at Mayo Wynne Baxter, said:
"Rent controls can create a two-tier market, benefiting existing tenants while making it harder for new tenants to secure accommodation."
"They may also discourage investment in maintenance and improvements, as well as limiting the supply of rental housing over time."
"These risks can be mitigated through targeted support for vulnerable tenants, incentives for investment in new rental stock, clear exemptions for new developments and policies that increase overall housing supply."
"The challenge will be ensuring affordability is improved without reducing choice, quality and availability across the rental market."
