Proposed rent cap could raise rents and reduce rental supply
Iceland A proposed government rent cap could lead to higher rents and fewer rental homes, contrary to its stated aims of lowering rents and improving tenants’ housing security, mbl.is reports.
The explanatory memorandum to a bill by Housing Minister Ragnar Þór Ingólfsson acknowledges that new limits on rent increases could push up starting rents. Research from other countries indicates that rent controls can reduce housing supply and tenant mobility.
About 60% of renters rent from individuals, according to HMS. These landlords often finance their apartments with loans and could choose to sell if returns become too low.
The government has also presented the rent cap as part of measures linked to collective wage agreements, which were agreed on Thursday.