(Matthew Doarnberger, Headline USA) The price of rent in Argentina has dropped significantly following the repeal of its rent-control law, as noted in a recent editorial by the Las Vegas Review–Journal.
After Argentinian President Javier Milei signed a bill ending rent control throughout the country in December 2023, the results of the repeal were swift and effective.
A report from February indicated that rent prices had dropped by over 20% and had continued a downward trajectory. Meanwhile, the supply of rental properties increased over 200% during the same time.
These reforms occurred in the aftermath of a form of tenancy rent control that was introduced by Melei’s predecessor, Alberto Fernández, in 2020. Following that decision, researchers estimated that around 45% of rental properties in the country were sold by the owner. Some also opted to list their previously rented properties on Airbnb as the number of available units on that website nearly tripled in the country’s capital, Buenos Aires.
It did not take long to notice the benefits of Milei’s repeal of the rent control law.
“Until about 20 days ago there was zero supply, we did not reach 50, 60 homes; and as of January 2024, there were more than 7,000 on offer,” said Enrique Abatti, president of the Chamber of Property Owners of the Argentine Republic, describing the rapid change in behavior that followed the law’s removal.
Though the evidence refuting rent-control legislation is significant, various governments around the world still enact it to see if it will work. Scotland has placed a 3% rent cap since 2022. The result has been a 12.7% increase in rental prices in 2023 compared to a 10.5% average across the United Kingdom.
“By shifting more financial risks and hassle onto landlords, tenancy rent controls encourage property owners to get out of the rental market,” noted the Cato Institute’s Ryan Bourne, describing how the economic impacts of rent control would be worse in Argentina.
However, the same economic principle of supply and demand would have the same effect everywhere it would be tried, he added.
“Argentina’s high inflation exacerbated these risks, meaning they were particularly destructive,” he said. “But the same underlying economics applies everywhere.”
