Generation Rent: Rent Controls Won’t Impoverish Landlords

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Ben Twomey, the CEO of Generation Rent, has recently voiced strong support for rent controls, asserting that they could significantly protect renters from poverty and homelessness. His comments come in response to a comprehensive study by the Institute of Economic Affairs (IEA), which examined the effects of rent control policies worldwide.

According to the IEA’s research, rent controls have generally succeeded in lowering rents in 56 out of 65 instances reviewed. However, the study also highlighted several negative side effects. These include a reduction in the construction of new homes, deterioration in the quality of the existing housing stock, limited tenant mobility, and inefficiencies in housing allocation. Twomey’s criticism focuses on the potential benefits of rent controls in addressing the immediate needs of renters, despite these unintended consequences.

Ben Twomey, Chief Executive of Generation Rent, has recently criticised landlords, arguing that rent controls are essential for shielding renters from poverty and homelessness. His remarks come after an extensive global study by the Institute of Economic Affairs (IEA) on rent controls.

The IEA’s study revealed that 56 out of 65 instances of rent controls successfully reduced rents. However, it also noted several negative side effects, including a slowdown in new home construction, deterioration in housing quality, reduced tenant mobility, and inefficient allocation of housing resources.

Despite these issues, Twomey argues that the benefits of rent controls in protecting renters outweigh the drawbacks. He states, “The notion that rent control protections for renters would be outweighed by these so-called harms is out of touch with the current pressures tenants face.”

Twomey acknowledges that rent controls are not a panacea and emphasises the need for more affordable housing. However, he insists that measures to prevent rents from rising faster than wages or inflation are crucial. “A fair and practical approach to controlling rent increases will not drive landlords into poverty but will provide crucial protection for many renters.”

A spokesperson for the Institute of Economic Affairs (IEA) remarked, “Economists are often divided on many issues—ask three economists, and you might receive four different opinions. Nonetheless, there are exceptions to this trend, and the topic of rent controls is one such exception.”

The spokesperson elaborated, “In the case of rent controls, the empirical evidence is notably consistent and conclusive. The findings from extensive research indicate that rent controls tend to reduce both the supply and quality of rental housing. They also negatively impact housing construction, restrict mobility among private tenants, and result in a misallocation of the existing rental housing stock. This convergence of evidence represents one of the closest things to a consensus in economic research that we are likely to see.”