Why Finland shows that rent controls don’t work

Why Finland shows that rent controls don’t work

0:01 AM, 8th March 2023, About A year ago 6

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A growing private rental sector crisis in the UK with landlords leaving and rents increasing has seen a growing clamour to introduce rent controls.

However, the experience of renters in Finland shows that this might be the wrong approach.

Politicians such as Nicola Sturgeon who unveiled a ban on rent rises in Scotland last September, which will be replaced by a 3% cap on rent rises in April, led the way.

Since then, the Welsh government has admitted that it has looked at introducing rent controls, and the issue of a rent freeze is a regular subject for Sadiq Khan, the mayor of London. The Labour Party has also warned that rent controls may be needed in the cost-of-living crisis.

Policymakers not introducing rent freezes or more regulation

However, an analysis from the Daily Telegraph shows that the experience in Finland where tenants saw a rent supply crunch during the 1990s led to policymakers not introducing rent freezes or more regulation.

Instead, they deregulated the sector to deliver affordable homes to rent – and that move has been hailed as a housing policy success story by the Organisation for Economic Co-operation and Development (OECD).

Before deregulation, Finland had a heavily regulated private rented sector with strict rules covering evictions and every aspect of renting controlled by the government.

But with the supply of homes to rent falling over 10 years by 11% in the 1990s, and fast rising rents, Finland decided to act.

Some landlords were not declaring rental income

The government acknowledges that some landlords were not declaring rental income for tax purposes, and some employers would lease building from landlords and then sublet them to an employee.

And once restrictions in Finland were lifted, there was an immediate bounce in rental property supply. Between 1990 and 2000, government statistics show that the number of homes for rent leapt by 45%.

The lesson learned from Finland, the Telegraph says, is that encouraging more landlords to invest in the rental sector did not lead to a negative impact on the country’s housing market.

However, one secret for Finland’s success is that there was a house building boom to meet growing demand.

One Finnish housing expert told the newspaper that rent controls have ‘unintended consequences’ and the lesson for the UK is to expand housing supply rather than imposing rent controls to deal with a housing crisis.

‘We need a balanced private rented sector which is fair’

A spokesperson from the National Residential Landlords Association (NRLA) told Property118: “We need a balanced private rented sector which is fair and works in the interests of both landlords and tenants.

“The introduction of rent controls would only serve to make the market more unstable, increasing the sector’s ongoing affordability issues.

“Evidence from practically every jurisdiction that has introduced rent controls shows that they reduce investment, make it harder for households to find quality accommodation, and ultimately damage their respective rental sectors.”

The spokesperson added: “The best way to tackle rising costs and restricted availability is to make investment more worthwhile.

“Pro-growth measures, including the scrapping of policies which deter investment, are the best way to provide a path towards greater investment in the sector.”

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Martin Roberts

10:37 AM, 8th March 2023, About A year ago

Ahh… Common sense.

Can’t see that catching on.

Fen Jen

12:12 PM, 8th March 2023, About A year ago

Hi the government is making too much money out of tax on the private rental market. It is not going to do anything to make life for private landlords cheaper. They are absolutely not interested in how many homeless people there are and make zero attempt to solve the crisis by providing homes. Their help to buy has finished.


14:49 PM, 8th March 2023, About A year ago

Reply to the comment left by Fen Jen at 08/03/2023 - 12:12
The government takes about £1 billion from S24 alone. I know it is ruthless but there are not many votes for homelessness whilst the optics will not look good.

The current government needs to keep Labour at bay so they trying to appeal to red wall areas hence the big focus on STOP THE BOATS.

Of course renters have votes so they will be chasing those too. However they will be assuming the HB and Social Housing voters will vote Labour by default so they assume they wont be able to attract them anyway BUT within PRS there will be voters that they could gain hence you still see the RR Bill coming to parliament probably before Easter break as again they need to keep Labour at bay.

The causalities in this are the homeless and the Landlords!

The Forever Tenant

15:13 PM, 8th March 2023, About A year ago

I can say without a doubt that the government absolutely cares about the number of homeless people and if there was ever a chance of hundreds of thousands or millions of people ending up in unsecured housing or living on the street, you can be absolutely sure that legislation will be put in place extremely quickly to stop it.

It would be quick and savage and there would likely be nothing you could do about it.

And as for The Conservatives or Labour, I can't stand either of them. Both of them just talk bad about the other without seeming to try and improve the lives of the countries citizens. I don't think there is a single party or there i could trust with the running of this country anymore.

The Forever Tenant

15:23 PM, 8th March 2023, About A year ago

I also forgot to mention my thoughts on the original article.

It's easy believe there is a correlation between deregulation and availability of housing, but it also feels a bit Post hoc, ergo propter hoc. We are taking the two elements out of the overall situation of Finland at the time.

Finland was in severe financial distress in 1990 and in a depression with massive inflation. This was not caused by housing alone, but a more general situation the country found itself in. There was mad unemployment, etc.

A few years later they were able to get out of this situation and we're able to turn themselves into one of the fastest growing economies through the various policies the government enacted.

So did the availability and cost of housing get better due to determination? Maybe.
Did it get better due to the country as a whole getting better? Maybe.

The biggest issue is that there is no control experiment, not could there ever be. We will never truly know the answer.

Monty Bodkin

13:38 PM, 9th March 2023, About A year ago

Rent controls don't work wherever the economically illiterate have tried it;


Rental supply in Ireland has plunged as a toxic cocktail of high taxes on landlords' income, rent controls and a winter eviction ban.

The supply crunch is driving up rents. Nationally, average market rents in Ireland rose by 13.7pc year-on-year in 2022

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