A grand real estate experiment is happening in South America. The rest of the world should take note. Argentina’s new president, Javier Milei, has dismantled one of the world’s most stringent rent control laws. It is part of a push since Milei took office in December to open up the free market by lifting trade restrictions and eliminating pricing caps on a number of products, including food. He’s calling it “economic shock therapy.” The immediate result is everything rent control opponents have been saying for years. Units that landlords had been leaving vacant or using as short-term vacation rentals rather than dealing with the restrictions are back on the market as housing. That surge in supply has kept monthly rent growth at its lowest level since 2021. But cracks are already starting to show — indicating this may be a one-time release valve that is quickly undone. The old law, enacted in 2020, required a minimum three-year lease, and annual rent increase caps were set by the central bank based on inflation and average salary. Now landlords can raise rents every three months with no max, and residents who got a great bargain on their initial lease say those savings are quickly being undone. Argentina is less than a year into this new policy, so it’s too early to declare victory or defeat. But what happens over the next few years may inform how the rest of the world eyes rent control. New York City has the same “warehousing” of units that limited supply in Buenos Aires. New York landlords say rent caps launched in 2019 make renovating units to inhabitable conditions a money-losing proposition, but a city program offering grants to cover those costs wasn't well-received. This summer, the city raised the cap, recognizing the increased financial pressures landlords are coping with. While multifamily landlords are fighting rent control in court and ramping up lobbying efforts, the Biden administration has proposed a 5% national rent cap, and Kamala Harris has made capping “unfair rent increases” a major part of her campaign. Over in the UK, the newly elected Labour party is anti-rent control, but housing advocates are putting pressure on it to change its stance in the face of record increases in housing costs this year. Multifamily owners writ large are against rent caps — they say the free market will keep prices at a place residents can absorb them, while more restrictions from the government increase the costs to build and operate units. Don’t count Greystar among them, though. The company, which has $78B of assets under management and is one of the world’s largest apartment landlords, operates in markets with rent control and doesn’t see it as antithetical to profit. A max of inflation plus a percentage point or two should be enough to cover costs, Greystar CEO Bob Faith said. “You do not have to have the windfall of a year of 14% rent increases in order to have a viable investment product,” Faith told the Financial Times. “I am not someone who would say, gosh, rent control of any type [is something] I am allergic to because I am not … as long as there is an ability over time for revenue to move with inflationary pressures,” he added. — Catie Dixon, Jay Rickey, Mark F. Bonner and Kayla Carmicheal Not getting The First Draft in your inbox? Click here to sign up. Got any feedback or want to send us a mailbag letter? Email firstdraft@bisnow.com. | 
