Tazu Walden explores how rent controls have worked – or not – in other countries, and asks what might be right for Wales
In the run-up to last month’s Senedd election, rent controls were front and centre in the battle between Plaid and the Greens on the left of Welsh politics. Since gaining power, Plaid have announced that action on rent controls will feature in a package on housing implemented in the first 100 days of government. The question now facing policymakers is how to design them.
While the Greens’ call for a strict freeze, Plaid argued for a more moderate system of “fair rent-setting”, limiting annual rent increases to the lower of wage growth and an inflation metric. In May, Institute for Public Policy Research put forward a similar proposal for rent controls: a “double-lock” linked to the lower of wage growth and inflation, applied nationally, both within and between tenancies.
Opponents of rent controls point to a long history which is littered with cases – New York, Berlin, Massachusetts, Stockholm – where poorly designed systems have reduced the number of rental properties available, reduced the quality of properties and made it difficult for new tenants to find a place to live.
Our research argues that these high-profile cases ignore the success of milder rent controls adopted across Europe, some of which have been in place for decades, such as in France, Spain and Ireland. Newer rent controls such as those implemented last year in Scotland show how a system designed with past failings can mitigate risks.
So what are the options available to the Senedd when it comes to design, and what can previous attempts teach us about what to do, and what not to do?
What are rent controls?
Simply put, rent controls tackle the frequency and extent to which landlords can increase rents. If we look internationally, rent controls are not an unusual policy tool. A 2024 study found that 14 Organisation for Economic Co-operation and Development countries regulate how much rent can be charged outright, and 24 regulate how much rent can rise by.
In Wales, a mild form of rent control – known as “third generation” – already exists, which limits how often a landlord can raise the rent to once a year. Plaid’s manifesto commitment to a rent control system tied to inflation and wages goes beyond regulating the frequency of rent increases to regulating their size.
The most well-known form of rent control is a rent freeze. However, rent controls are a broad umbrella, and governments have a series of options when designing policy to determine their strength and breadth.
For example, what is the cap on the amount landlords can raise rent? A strict freeze might be best for tenant affordability, but most modern regimes tend to allow some increases to keep landlords in the market. Are rent rises limited when you move house or only within an existing tenancy? The first option doesn’t disadvantage movers, but the second gives landlords more flexibility to recoup costs. Are measures limited to a single city to tackle particularly inflated urban rental markets, or applied uniformly across the country? The former is more targeted, but the latter is easier to implement and prevents price rises outside of the city.
Do rent controls work?
Rent controls are effective at reducing the rents of controlled units. The most comprehensive review found that rent controls reduced rents by an average of 9.4%. In Paris, regulated rents were 5.2% lower than forecast to be between 2019 and 2024, and up to 8% lower in more recent years. This corresponds to an estimated saving of 1,700 euros for the average Parisian in a rent-controlled property.
In spite of this, rent controls are politically contentious. Price intervention on housing is often seen as more radical than in other essential sectors like energy or water. Our research shows that well-designed rent control policy can mitigate risks to quality, landlord exit and new housebuilding. An eye to what has worked elsewhere and why will be essential if the Welsh Government is going to get it right.
San Francisco
San Francisco is commonly cited as having a failed rent control system: rental supply shrank by 15% and rents increased by about 5% in rental properties not covered by controls. Critics argue this reflects a classic supply problem: if rent caps make letting less profitable, some landlords may sell, convert or withdraw properties from the regulated market. That can reduce availability and push up rents for tenants left searching in the uncontrolled sector.
But if we look closer, easy exit routes or major carve-outs for landlords are at the root. The regulation only applied to a limited subset of properties, meaning landlords could easily sidestep the rules by converting their properties. Similarly, in Spain, an initial exemption for short-term lets of up to 11 months led to a wave of conversions out of the private rented sector. The government closed this loophole a year later, and evidence suggests Spanish housing supply has remained stable.
Berlin
Berlin is often cited as an example where the introduction of a strict rent freeze in 2020 scared investors and dampened new construction rates. Building permit issuance fell from about 2,000 a month in mid-2019 to approximately 1,180 a month. However, the policy was subject to legal problems from the outset, which impacted investor certainty, and the law was struck down within a year as unconstitutional.
Under the milder rent control system that applies across Germany, build-rates have recovered following the downturn caused by the Russian invasion of Ukraine. The state has played a crucial role in this turnaround, with Berlin having multiple state-owned companies providing project development financing. The system in Berlin also has strong quality standards for privately rented properties, making investment in properties a legal requirement for landlords. The landmark new Minimum Energy Efficiency Standards (MEES) passed by the UK Government and Wales’ own minimum standards in place since 2016 should provide the same protections.
However, Germany’s milder policy is not without flaws and has been criticised for its extensive exemptions for new builds, furnished properties and substantial renovation, which have created a significant price gap between regulated and unregulated properties and reduced people’s willingness to move.
Spain
The situation for renters in Spain shows the size of the prize if rent controls are designed well. Rents in Spain have been capped broadly since March 2022, and official data shows that rents in Spain rose by 2.7 and 2.6% in 2022 and 2023 respectively, compared with 4.4% and 9% in the UK when faced with similar pressures. In Catalonia, which has had rent controls since 2020, rents actually decreased by 4% to 6% in controlled properties. There is no clear trend of landlords leaving the market in large numbers, and no evidence of a lasting hit to housebuilding. In 2025 the Spanish government confirmed the highest rate of new-build housing in 12 years, with a strong development pipeline for 2026.
The Spanish government has accompanied a new, smoothed inflation index with policy to promote mobility, state support for housebuilding and incentives to prevent landlords from raising the rent between tenancies. The Catalan government has also taken a strong line on short-term letting to encourage a stable supply in the long-term rental market.
Designing a rent control system for Wales
The most successful systems combine moderate limits on rent increases with measures to maintain housing supply, support new development, enforce quality standards and close potential loopholes. The least successful tend to be those that create uncertainty, contain large exemptions or allow landlords to sidestep regulation altogether. For the Welsh Government, the challenge is how to build a system that delivers affordability without undermining the long-term health of the rental market. Learning from others will be a key step, and there are positive signs, with Plaid already looking to Scotland, where rent controls have clearly been designed with past failings in mind.
Tazu Walden is Researcher at the Institute for Public Policy Research.