But while they failed to halt overall rental inflation, Scotland’s rent controls still led to a deterioration in rental market conditions.
The most likely reason for that is that once a government shows it is willing to interfere with private property rights and voluntary private agreements, landlords – both current and potential future ones – expect that it will not stop there.
Not included in Kholodilin’s paper, but also illustrative from the other end of the policy spectrum, are the recent developments in Argentina, where libertarian president Javier Milei has scrapped the second-generation rent controls brought in by his predecessor.
Supply has since shot up and rents have come down. Thus, Milei achieved the very thing that Khan wants (namely, lower rents) but he did so by liberating market forces rather than using the force of the state to crush them.
Argentina and the UK may not be directly comparable. But there is nonetheless a broader policy lesson here: the alternative to rent controls is not to do nothing; it is to stimulate the supply of housing.
At the UK national level, this should, at the very least, mean restoring London’s housing targets (which Sir Keir Starmer’s Government have inexplicably cut). Better still, this would mean increasing them and enforcing them more strictly.
At the London level, it would mean using the London Plan to release more land and using the Mayor’s powers to override Nimby objections.
Britain’s housing market needs a supply-side reformer: a British Milei, not a Khan.
Kristian Niemietz is the editorial director at the Institute of Economic Affairs
