Argentina’s Repeal of a Rent-Control Law gives Credence to its Damaging Consequences

As government officials continue to implement increasingly more restrictive rent-control laws, the actual results move further and further away from the intended results. Cited as the latest proof is efforts by Argentina’s President Javier Milei to turn around the “triple-digit inflation and failing economy” that he inherited upon assuming office in December 2023.  Some of the measures taken included eliminating government jobs, contracts, and subsidies, but “perhaps the most successful measure, however, was repealing a rent-control law the National Congress had passed in 2020.” The statute intended to provide renters with more economic security “locked landlords into rent-controlled leases for a minimum of three years and capped rent.” The consequences described as “swift and brutal” sparked varied results, but more importantly, it pushed the “average rent for a two-bedroom apartment in Buenos Aires from nearly 18,000 pesos a month at the end of 2019 to 334,000 pesos four years later, well beyond the 210,000 pesos a month if the rate had tracked inflation,” and since the repeal, have lowered by double digits. The destructive consequences of rent-control, which exacerbates housing shortage instead of relieving it, has been shown repeatedly by nearly a century of case studies by several notable economists. Additional cited consequences include units becoming unrentable due to disrepair as “landlords neglect basic maintenance or upgrades, because they can’t recoup investments through rent increases; the potential of “secured tenants in rent-controlled environments not giving up their units for decades, even after their needs have changed;” and the imposed eviction moratoria during the pandemic-era, forcing landlords to go “months or years without being able to evict nonpaying tenants,” but once those restrictions were lifted, landlords raised prices to recoup costs, hedge against inflation and deter squatters.”

Source:    https://www.wsj.com/opinion/rent-control-is-a-great-destroyer-79336c82