The legislature of Mexico City has passed a groundbreaking rent control law, marking the most significant measure since the 1940s. The new law restricts rent increases to the rate of inflation from the previous year, aiming to address concerns over escalating rental prices in the city.
Historically, rent controls in Mexico City date back to the 1940s when rents were essentially frozen, a practice that continued for decades. However, these controls were largely lifted in the 1990s, leading to a surge in rental costs.
Under the new legislation, landlords are required to register all rental agreements with the city. While the law limits rent hikes, it remains unclear whether landlords can charge additional fees for property improvements.
The issue of rising rents has been exacerbated by factors such as digital nomads and short-term rentals, particularly in tourist-heavy neighborhoods near the city center. Legislators have expressed concerns about the displacement of traditional residents due to profit-driven rental practices.
Despite the new law, Mexico City continues to face a housing shortage, with an estimated need for 800,000 additional housing units. The city heavily relies on private developers for housing construction, raising questions about the potential impact of the rent control law on investment in residential projects.
While the legislation aims to address rent affordability, it does not directly tackle the root cause of the housing crisis. The government lacks concrete plans for large-scale public housing projects and struggles with limited resources and expertise in construction.
President-elect Claudia Sheinbaum has proposed a rent-to-buy program to assist low-income tenants. The initiative would allow tenants to pay reduced rents, with the option to apply these payments towards purchasing the property through government housing loans.
Looking ahead, there are discussions about the federal housing agency taking a more active role in building affordable housing. Currently, the agency primarily provides financing for home acquisitions from private developers.
