Analyzing Argentina’s Shift Away from Rent Control

In late 2023, Argentina underwent a transformative policy shift when President Javier Milei eliminated rent controls—a measure that had shaped the country’s housing market for decades. Advocates argued that rent controls distorted housing markets by discouraging investment and limiting rental availability, while critics warned that deregulation would exacerbate housing insecurity for low-income renters (Inter-American Law Review, 2024; The Wall Street Journal, 2024). This case study explores the economic implications of this reform, focusing on its impact on housing supply, inflation, and welfare, and reflecting on the broader lessons it offers for policymaking in volatile economies.

Rent controls in Argentina were introduced to stabilize housing affordability during periods of economic instability, particularly in urban centers like Buenos Aires. Initially, these policies provided relief to tenants, but over time, they created significant market inefficiencies. For instance, a 2020 study revealed a 45% reduction in available rental properties as landlords withdrew units from the market due to financial disincentives created by price ceilings (The Wall Street Journal, 2024). These restrictions also led to deferred maintenance, resulting in deteriorating housing quality.

Moreover, hyperinflation exacerbated these challenges. Under fixed-price regimes, landlords struggled to cover rising costs, pushing many toward informal rental agreements that lacked legal protections for tenants. These practices further fragmented the housing market, reducing transparency and security. By the time the Milei administration repealed rent controls in 2023, the system had become unsustainable, necessitating bold reforms to restore balance and attract investment (Inter-American Law Review, 2024).

The elimination of rent controls had a profound impact on Argentina’s housing market. Within three months of the policy change, rental listings in Buenos Aires surged by 170%, as landlords re-entered the market, motivated by the ability to charge competitive rates (The Wall Street Journal, 2024). This significant shift in rental availability is visually represented in the chart below, which illustrates the dramatic increase in property listings following the removal of rent controls. The data highlights how deregulation unlocked a substantial portion of the housing market that had previously been withheld by landlords under price ceilings.

Figure 1 – Source: Maure Inmobiliaria

Economic theory and evidence from other deregulated markets suggest that lifting rent controls often incentivizes landlords to improve housing quality to attract tenants. While data on housing conditions in Argentina post-deregulation is limited, studies from other contexts, such as Cambridge, Massachusetts, have shown that deregulation can lead to increased maintenance and property upgrades as landlords compete for tenants (National Apartment Association, 2021). In Argentina, this dynamic is likely unfolding, particularly in urban centers like Buenos Aires, where competition among property owners is intense.

Despite these positive shifts, deregulation also presented significant challenges for low-income renters. Rising rental prices, compounded by persistent inflation and stagnant wages, placed many households under financial strain. In Buenos Aires, a single adult requires 675,960 pesos (approximately US$712) per month to cover living expenses, while a family of four needs 1,564,836 pesos (US$1,649). These figures highlight the disproportionate burden faced by low-income renters, even as housing availability improved (Nearshore Americas, 2024).

The reform took place in a context of severe economic instability. By December 2023, Argentina’s annual inflation rate had reached 211.4%—the highest in 32 years—while monthly inflation peaked at 25.5% (AP News, 2024; Trading Economics, 2024). The chart below illustrates Argentina’s inflation trajectory leading up to the repeal of rent controls, highlighting the extreme economic pressures faced by both tenants and landlords. These inflationary trends provide crucial context for understanding the urgency behind the Milei administration’s market liberalization efforts.

Figure 2 – Source: Trading Economics

Early trends suggest that the deregulation of rent controls encouraged property owners to re-enter the rental market, contributing to a significant increase in supply. However, detailed comparative data on the policy’s regional impacts remain scarce. Urban centers like Buenos Aires experienced more immediate effects, with a marked increase in rental listings, while the impact in rural areas, where housing markets are less regulated and dynamic, is likely to have been less pronounced (Jacobo & Kholodilin, 2022). These regional disparities underscore the need for nuanced policy approaches that account for local economic conditions.

The removal of rent controls produced uneven welfare outcomes across income groups. Middle-income households benefited from increased rental availability and improved market dynamics, with real rental prices decreasing by 40% when adjusted for inflation (The Wall Street Journal, 2024). For these groups, deregulation offered greater housing options and, in some cases, improved quality of life.

Conversely, low-income renters faced significant hardships. Rising rents, coupled with stagnant incomes, forced many families to allocate a disproportionate share of their earnings to housing. This financial strain led to increased evictions and a rise in temporary homelessness, particularly in urban areas where housing costs are highest (AP News, 2024). These outcomes illustrate the limitations of market-based solutions in addressing structural inequalities and highlight the importance of implementing complementary measures to protect vulnerable populations.

Argentina’s recent shift away from rent controls marks a pivotal chapter in its economic history, underscoring both the potential and perils of bold policy reform. As explored, the removal of rent controls addressed deep-seated inefficiencies, boosting rental supply and fostering competition. However, this progress came at a steep cost to low-income renters, highlighting the enduring challenge of balancing market efficiency with social equity. By reflecting on the outcomes of this reform, policymakers in volatile economies can draw valuable lessons: achieving sustainable housing solutions requires not only removing barriers to market function but also implementing safeguards to protect society’s most vulnerable. The Argentine experience serves as a powerful reminder that economic stability and social inclusivity must go hand in hand.