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Mamdani and the False Promise of Rent Control Rent control promises relief but delivers scarcity, higher costs, and fewer homes

Zohran Mamdani, the New York mayoral candidate, is trending. His promise of more aggressive rent control is capturing voters’ attention in New York City and has renewed interest in the policy across the United States. But rent control is nothing more than a poor patchwork in a city plagued by housing shortages. Rent control might provide a temporary fix for frustrated tenants, but it’s an inadequate and misguided solution to New York City’s complex problems for anyone whose time horizon is longer than a couple of months.

The history of rent control isn’t rosy. New York City is likely the poster child of rent control gone wrong, but it’s far from the only city. In 1994, San Francisco instituted rent control for buildings built before 1979. This rent control referendum ignited an eviction explosion; filings for eviction shot up 83 percent and wrongful eviction claims rose to 125 percent. Landlords were incentivized to evict tenants so they could charge new renters an updated market price; as the markets shifted, rent did not.

The supply of rental housing in the city fell by 15 percent, and landlords removed their listings from the market or converted them to condos. A 2018 Stanford Business paper found that the city’s rent control expansion led to a 5% increase in city-wide rents. Further research highlights how rent control causes other negative externalities to the city and nearby residents, including reducing amenity values and indirectly raising other costs on nearby markets.

San Francisco continues to be an example of rent control failing in a populous city; evictions shot up, and a housing shortage has ensued.

International examples are numerous too. Ireland, and particularly Dublin, has especially felt the consequences of its rent control laws. Empirical research has noted that rental supply in the country worsened after the introduction of rent stabilization in 2016. Ireland has declared that the entire country is a Rent Pressure Zone (RPZ), in which rent cannot be increased by more than 2 percent per year.

Previously, only certain parts of the country were designated as RPZs, but this designation is national until February 2026. RPZs are not working; since the beginning of 2024, rent in the country has increased by 8.1 percent for new properties and 5.9 percent for existing housing. Landlords in the country know that they will be capped by this two percent rule, so they will continue to charge higher upfront prices to new tenants.

Irish politicians previously thought they could stop runaway rent by implementing rent stabilization just enough to “buy time for housing supply to catch up with demand.” This plan has clearly failed. Construction has stalled, and the nation is facing a yearly shortage of 20,000 units. So bad is the situation that there is worry that people will leave the country. Locally noteworthy Catholic priest Father Peter McVerry lamented,

We are one of the wealthiest countries in the world. We have a 26-billion-euro budget surplus. And yet food kitchens are booming. More and more people are queuing up because they cannot afford to feed themselves. That is an absolute scandal.

Buenos Aires is another example. In 2020, the “Lipovetzky Law” was introduced to control rent. Under this law, landlords could only adjust rental prices once a year and began receiving payments in the Argentine Peso, a currency that was rapidly losing value. Inflation in the country rose to 211.4 percent in 2023.

Landlords increased the cost of rent, leading to an explosion from a monthly average of 18,000 pesos in 2019 to 334,000 pesos by January 2024. At the height of rent control, one in seven homes in Argentina sat empty. In 2022, 200,000 properties sat empty in the capital city. Some landlords completely pulled their properties off the market; the incentive to rent was gone.

When Javier Milei, president of Argentina, took office in 2023, he repealed the Lipovetsky Law and the effects were instantaneous. The number of available rental units increased by 170 percent and the price of rentals dropped 40 percent, compared to early 2023 levels. In Buenos Aires, “the real price of renting fell almost 27 percent in the first seven months after deregulation occurred.”

The United States has also seen some positive changes in its approach to housing and rental stability over the years, though it has been few and far between. The Costa-Hawkins Act was enacted in California in 1995. This act is a statewide mandate implementing rent-control with vacancy decontrol for homes built before 1995. Vacancy decontrol allows landlords to charge market rates or higher when a tenant leaves. This suppresses eviction pressures because landlords are not stuck to a specific rate increase like Ireland and Argentina. Costa-Hawkins is far from perfect, but it still allows room for market flex, preventing widespread disaster like San Francisco in 1994.

Austin, Texas, is also worthy of valorization. The city has made a number of important policy reforms that have lowered rental costs by focusing on increasing the supply of housing in response to its rapidly growing population. Contrary to what cities like New York and San Francisco have historically done, Austin has streamlined the permitting process, promoted mixed-use development, and upzoned swaths of the city. This influx of new construction has alleviated some of the competitive pressure in the rental market, which was previously driving prices up. Rent prices in Austin have dropped 9% since the city’s two-year high, the best in the nation.

As Art Carden et al. previously covered, investors are not likely to finance housing projects when rent control is in place; the opportunity cost is too high. As currency inflates, investors earn less on returns. For example, current 12-month treasury yields sit at 3.91 percent. Treasury yields are generally considered low-risk because the US has never officially defaulted on its obligations (the United States government has previously had four episodes of seemingly bad-faith repayments, or at least, evasion of the spirit of the bargain; the Congressional Research Service disputes these instances as actually qualifying as defaults). Housing projects already entail enormous risk for investors, but with rent control, the desirability of pursuing these types of projects diminishes relative to other asset classes.

Mamdani wants to freeze rent for over two million rent-stabilized tenants. This effectively transforms the limitations on how quickly a landlord can increase rents into a price ceiling, which is generally seen as a worse form of rent control. Once rents are capped, landlords may stop renting and often sell their properties to buyers who do not intend to rent. This will only exacerbate the city’s housing shortage.

If Mamdani wins, he should focus on encouraging the reform of a burdensome permitting system and ending zoning restrictions in a city that makes building new housing incredibly difficult. Moreover, tax incentives could encourage office-to-housing conversions, and upzoning and density near transit would also be welcomed.

Housing needs to be built, not frozen. While this may sound like a compelling solution to NYC’s affordability crisis, the truth is that the economics of such a proposition do not work. Rent control hurts rental supply and quality. New York City does not need to look far into the past to see that such policies hurt the average tenant and disincentivize landlords from even renting. Mamdani’s promise will lead to empty units and crowded streets.

Author: By Sam Jenson, Jonathan Hofer
Source: https://www.independent.org/article/2025/08/19/mamdani-austin-rent-control/