Rental: is rent control responsible for the shortage of rental properties?

Excluded Capital

Does rent control contribute to a drop in the number of homes available for rental? A study revealed in preview by Capital finally answers this question.

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This is the main argument of critics of rent control: this system, implemented for the first time in France in Paris, in 2019, would contribute to reducing the number of properties available for rental. According to its opponents, rent control would in fact dissuade private owners from renting out their property, which would worsen the housing shortage. But are these grievances really justified? Is rent control the main cause of the collapse in rental supply in large cities? The company PriceHubble, specializing in the processing and analysis of real estate data, provides some answers to this question in a study revealed exclusively by Capital.

As a reminder, rent control is a regulatory tool aimed at limiting the increase in rents in areas where the real estate market is particularly tight, that is to say where the demand for housing is much higher than the supply. This measure sets a ceiling on the rent that owners can charge their tenants when renting a property or renewing a lease. This ceiling is calculated based on a median reference rent observed in the area concerned. To this median rent are added thresholds defining a minimum rent (reference rent -30%) and a maximum rent (reference rent +20%). The primary objective of rent control is to make housing more financially accessible to tenants, by avoiding speculative excesses.

Thousands of ads analyzed

Price Hubble’s scientific teams analyzed thousands of advertisements for rental housing in major cities, available on the main French real estate sites, such as Se Loger, Bien d’Ici PAP. Note that only small areas (T1 and T2), the most requested properties, were taken into account in the study. Based on this data, PriceHubble estimated the change in the volume of available listings between the first quarter of 2021 and the second quarter of 2024, in three types of cities. Those who have already implemented rent control (Paris, Lille, Lyon, Bordeaux, Montpellier), those who are applying to implement the system (Marseille, Rennes, Grenoble), and those who still do not have project to regulate rents (Toulouse, Nantes, Strasbourg, Tours). In this way, it is possible to compare the extent of the drop in the number of properties for rent since 2021 in cities which apply rent control, and in those which do not apply it.

The rise in rates, the real culprit

So, does rent control really harm the rental market by drastically reducing the number of properties available for rental? “If this were the case, we should observe a much more pronounced collapse in rental supply in recent years in the cities which apply the systemexplains Loeiz Bourdic, chief product officer at PriceHubble. However, our data shows another reality since the drops in volumes are comparable between cities with or without rent controls.“. For example, in large student towns which apply rent controls, we observe a sharp drop in the volumes of properties available for rental. The number of advertisements has thus fallen by -35% in Lille since 2021, by -37% in Lyon, by -50% in Bordeaux, or even by -37% in Montpellier. But these reductions are similar to those observed in municipalities which do not apply rent controls. “It seems that the sharp reduction in the volumes of properties for rent is not directly linked to rent control, continues Loeiz Bourdic. It is rather linked to the increase in credit ratewhich prevents first-time buyers from accessing the property» and, therefore, to vacate the accommodation they rent.

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On the other hand, the PriceHubble study tends to demonstrate that the increase in rents has been more contained in cities where rent controls are in place. In the municipalities which apply the system, the evolution of the median rent varies between +5% and +11% since 2021. On the other hand, this increase is much more marked in several cities which do not apply rent controls, such as Marseille (+15% since 2021), Rennes (+17%) or Brest (+20%). So much proof of the effectiveness of this device.