Shortly after taking office, Argentina President Javier Milei issued an executive decree that repealed the country’s rent control laws along with a host of other economic regulations. The results were predictable and almost immediate. The supply of rental housing soared, and prices significantly declined. Protecting property rights is moral and practical.
Introduced in 2020, Argentina’s rent control law required a minimum lease of three years. Rent increases were strictly regulated and rents had to be paid in pesos. With inflation running 200 percent and higher, landlords faced enormous financial risks. They responded by selling their properties, switching to short-term rentals, or simply leaving the property vacant. As an example, in 2019, there were about ten thousand properties in Buenos Aires listed on AirBnB. That number tripled in four years.
Milei’s decree allows landlords to charge market rates, end\s the three-year minimum lease, and permits rents to be paid in a foreign currency, including dollars. With most of the risk removed, landlords flooded the market with rental housing. One broker reports a 50 percent increase in the number of properties being offered for rent. With the supply of housing surging, prices have dropped between 20 percent and 30 percent.
The market reaction to both the imposition of rent control and then the repeal of rent regulations was predictable. Price controls always lead to a supply shortage because there is little incentive to continue producing when profits are arbitrarily capped. The repeal of price controls incentivizes production and supplies increase.
The results of repealing rent control demonstrate that protecting property rights is practical. And property rights are practical because they are moral.
The right to property means the freedom to produce, use, and trade material values as one judges best. Rent control prohibits this by forcing landlords to trade on terms that they did not voluntarily accept. Restoring property rights to landlords enables them to trade on terms that are acceptable to themselves and renters.
Progressives Regressives around the world are pushing for rent control to address the affordable housing crisis. As Argentina demonstrates, rent control isn’t the solution for a supply shortage. Freedom for housing producers is the solution because protecting property rights is moral and practical.