A briefing paper on rent control from the Institute of Economic Affairs (IEA) found that they produce more negative consequences than benefits.
This briefing was published as calls to introduce rent controls in Britain have mounted in response to the housing crisis.
London Mayor Sadiq Khan, a recent Labour-commissioned report, and the Green Party have backed the idea.
Scotland had a rent increase cap until March 2024, and tenants can still challenge some increases.
Rent control involves the Government setting the price for rent, usually below the market value.
The paper, authored by Dr Konstantin A Kholodilin, senior researcher at the German Institute for Economic Research (DIW Berlin), reviewed 196 studies undertaken over 60 years, spanning almost 100 countries in all inhabited continents.
The briefing paper highlighted a strong consensus in the academic literature about the impact of rent control.
According to Kholodilin, rent control benefits existing tenants at a significant cost to the broader society.
This leads to lower maintenance spending, conversion to owner-occupation, and the construction of fewer new properties, ultimately exacerbating a housing shortage.
According to Kholodilin, rent controls can also create ‘excess demand’ for housing.
This can result in new residents finding it difficult to locate places to live, which decreases labour mobility, increases discrimination against marginalised groups, and boosts black market activity.
The policy can also result in people staying in their existing housing for longer than they should, such as remaining in a large rent-controlled property after family has moved out and it is no longer needed.
The lack of movement leads to a ‘misallocation’ of available properties, resulting in further economic damage.
Kholodilin said: “Rent control effectively reduces rents in the controlled sector, but does it a high price.
“Tenants occupying the rent-controlled dwellings benefit the most, at least in the short run, while newcomers lose from rent control.
“In the long run, rent control can undermine the rental sector forcing landlords to convert their dwellings and tenants to become homeowners.”
Dr Kristian Niemietz, editorial director at the IEA, said: “Economists are a notoriously divided profession: ask three economists, and you get four opinions.
“But there are exceptions to this, and the study of rent controls is one of them.
“This is an area where the empirical evidence really overwhelmingly points in the same direction.
“The finding that rent controls reduce the supply and quality of rental housing, reduce housing construction, reduce mobility among private tenants, and lead to a misallocation of the existing rental housing stock, is as close to a consensus as economic research can realistically get.”
Ronan Lyons, associate professor in economics at Trinity College Dublin, said: “Dr Kholodilin’s comprehensive review of the rent control literature is tremendously helpful, not just for academics but also for policy analysts and policymakers, as numerous cities across the high-income world grapple with housing shortages.
“The resurgence in rent controls over the last decade is, given the affordability challenge in housing, perhaps politically understandable.
“But, as Konstantin’s thorough overview shows, the economic costs of such policies can be significant.
“Armed with the key facts marshalled by this review, policymakers can make better informed decisions on rent affordability policies.”
