The Economist has published an article looking at the problems associated with renting in different countries.

The original article can be seen here (subscription may be necessary) and says

The Real Cause of Rising Rents: Housing Shortages, Not Landlord Greed

Over the past decade, governments have intensified interventions in rental markets to protect tenants, but rents continue to rise. In many countries, including Germany, Britain, Ireland, Spain, Australia, and the U.S., policies like rent caps, higher landlord taxes, and stricter tenancy regulations have been introduced. However, these measures have failed to control rental inflation because they address symptoms rather than the root cause: a lack of housing supply.

Key Reasons for Rising Rents

1. Housing Shortages: Governments have restricted new construction, preventing supply from keeping up with growing demand, particularly as immigration increases.
2. Landlords Leaving the Market: Strict regulations and reduced profitability have led many landlords to sell their properties, further tightening supply.
   • In Barcelona, long-term rental listings dropped 75% between 2019 and 2024.
   • In Ireland, the number of tenancies fell 23% between 2016 and 2022, despite population growth.
3. Homeownership Isn’t Always a Solution: While some landlords selling properties can increase housing supply, buying remains difficult due to legal complexities, property taxes, and high mortgage rates.

Negative Consequences of Rental Market Interventions

• Landlords reduce maintenance since demand remains high regardless of property conditions.
• Tenants face greater competition for available rentals, making it harder to find housing.
• Labour mobility declines, as a restricted rental market makes it harder for workers to relocate for jobs, hurting economic growth.

The Solution: Build More Homes

Instead of restricting rental markets, governments should focus on liberalising construction rules to boost housing supply.

• Texas serves as an example, where fewer building restrictions have kept rental markets flexible and affordable.
• Some governments, like Ireland, are reconsidering rent controls, and others could follow.

Ultimately, increasing housing supply is the only sustainable solution to lowering rents and stabilising rental markets.