In Luxembourg, the rule that governs the setting of rents is that of 5% of invested capital. Problem: the definition of invested capital is very vague, according to professionals. For the Minister for Housing, 
There is no single model or miracle solution... but a diversity of systems. This diversity is due to political objectives, historical contexts and market structures that vary from one country to another. The differences mainly concern the degree of constraint, the methods of setting rents, the scope of application and the mechanisms for challenging them.
Politically, rent controls are a complex trade-off between the right to affordable housing and the need to maintain dynamic private investment, a social compromise between the interests of landlords and tenants and the economic imperatives of the state. It can take a number of forms, such as a framework, a cap on increases or an outright freeze. The latter is the exception, with public authorities favouring so-called 'second-generation' systems, such as indexation or reference to the market.
On the other side of the border
Among the major models, the first is the points-based cap introduced in 1979 in the Netherlands: the Woningwaarderingsstelsel, or housing valuation system. The maximum rent is determined by the intrinsic characteristics of the property (surface area, comfort, equipment, energy performance). Each of these features earns points, which are used to set a ceiling price, the maximum reasonable rent. Above a certain point threshold (liberalisation threshold), the rent becomes free. The scheme was reformed in 2024 to cover more properties.
In France and Germany, the system is based on a reference rent. In Germany, the Mietspiegel defines a reference rent for each district, which may not be exceeded by more than 10% or 20% depending on the zone. The Mietspiegel is federal legislation based on a district-by-district database.
In France, the framework does not apply automatically; local authorities must request it. The Alur law (law on access to housing and renovated urban planning) sets a median rent, which can be increased by 20% in so-called "tense" areas. If a rent is 30% below the median value, it can be increased by the landlord. Rent supplements are possible for exceptional properties (in terms of services or location). Major cities such as Paris and Lyon have introduced rent controls. The city of Nice has abandoned the system in 2023. In addition, in France, increases during the lease are limited by an official index, the rent reference index (IRL). Some provinces in Canada use a similar mechanism. In Spain, the cap is limited to "areas under property pressure", defined as areas where rents exceed 30% of average incomes.
Finally, some systems only protect existing tenants, allowing the landlord to set a market price when there is a change of occupant. Other systems, such as in Paris, regulate the rent even between two tenants. The idea here is to better control the boom in subletting.
Sweden-Argentina: a clash of extremes
The Swedish system is often cited as the most rigorous in Europe. To set rents, the kingdom has chosen to replace the market with collective bargaining. Rents are negotiated globally between tenants' and landlords' organisations. The rent for a property must not be more than 5% higher than that for comparable properties. Rents are also set on the basis of the quality and facilities of the property, rather than its location. Furthermore, in this model, the rents set for public housing are used as a direct reference for the private sector. This gives the government a means of controlling market trends.
In contrast, with Javier Milei coming to power in Argentina, rent controls as set by a 2020 law were abolished in October 2023. Previously, the law had long required contracts to be updated every six months in line with an official index. As a result, rental supply has risen by 170% while rents have fallen. This shock therapy has put a good number of empty properties - 200,000 of them in Buenos Aires - back on the market. It is still too early to determine whether this catch-up effect will have an impact on rent trends.
The impact of these regulations on rent levels is a central question. Although rents are tightly controlled in Sweden, they have been rising steadily since 2010 according to Eurostat, based on figures from Statistics Sweden (SCB). This upward trend has not been halted by the sharp fall in property prices between 2022 and 2024 (-16%). The Swedish market is characterised by a severe shortage of rental properties, resulting from an imbalance between stagnant supply and high demand. The average rent has risen by 5% in 2024 and by 4.6% in 2025. For opponents of rent regulation, the reduction in supply is the main criticism levelled at the system.
For and against: A dialogue of the deaf
Generally speaking, those in favour of regulation believe that it limits excessive rent rises and helps to keep low-income households in town centres. By ensuring predictability of costs, rent controls protect tenants against economic eviction and encourage tenants to stay in their homes, which is crucial for social cohesion. By capping potential income, regulation can also curb runaway property prices and speculative behaviour by landlords in saturated markets.
Opponents of rent controls point to what they describe as "perverse effects", the main ones being a reduction in supply. In their view, the cap discourages rental investment and leads many landlords to withdraw their properties from the market, exacerbating the shortage. A second criticism relates to the deterioration of the stock, with low yields leading owners, through lack of resources or incentives, to maintain their properties less well. On this point, it should be noted that in the Dutch model, landlords can legitimately increase their rent by investing in insulation or comfort in order to gain points.
Another criticism: the creation of a two-tier market that penalises new entrants who are less protected than "old tenants". The rents of the latter increase less quickly. As a corollary, tenants benefiting from very low rents are encouraged to stay in accommodation that no longer corresponds to their needs - for example, a single person in a large flat - which blocks the natural rotation of the stock. This is known as the crystallisation effect.
Furthermore, rent controls would encourage practices designed to get round the rules, such as "kickbacks" or fictitious overcharges for furniture when taking over a lease.
