The implementation of rent control in major cities such as Paris, Lille, Lyon, Bordeaux, and Montpellier has led to a slowdown in the increase of median rent prices per square meter. In Paris, where the system was first implemented in 2015 and then suspended in 2017, rents quickly rose when the cap was lifted, but stabilized or decreased once it was reinstated in 2019. A similar trend was observed in Lille and Lyon, where rent control measures were revoked in 2017 and then reintroduced in 2020 and 2021 respectively.
However, the effectiveness of rent control in these cities is difficult to assess due to various factors. Bordeaux only implemented the system in 2022, and data for 2023 is not yet available, while in Montpellier, rent prices had been stable since 2020, before rent control was put in place. The slowdown in rent inflation may not only be attributed to rent control measures but also to the low fluctuations in the reference index for rent prices (IRL), which determines the maximum annual rent increase a landlord can implement based on inflation.
The IRL, calculated quarterly by INSEE based on inflation rates, has remained low in recent years, with increases often below 1% or even close to 0% due to minimal inflation. Since mid-2022, the maximum rent increase has been capped at 3.50% by the “rent shield,” which is lower than the rise in consumer prices. This has contributed to the stabilization or decrease in rent prices in some cities, along with the implementation of rent control measures.
The evaluation of the impact of rent control on households and the rental market was expected to be released by the Ministry of Housing by the end of 2023. However, the report is now delayed until 2026. Despite this, data from official sources and private entities provide some insights into the effects of rent control in major cities, suggesting a correlation between rent stability and the implementation of rent control measures in Paris, Lille, and Lyon.
Overall, the debate on the effectiveness of rent control in addressing housing affordability and supply issues continues. While it appears to have led to a slowdown in rent inflation in some cities, its long-term impact remains uncertain. Factors such as the overall housing market conditions, inflation rates, and the specificities of each city play a role in determining the effectiveness of rent control measures. As the evaluation report is delayed, further research and analysis will be needed to fully understand the implications of rent control on households and the rental market.
