Rental control is becoming an increasingly polarizing issue in Europe

Rental controls are becoming increasingly popular in many European countries, but experts note that this rarely solves housing crises and may even lead to fear among investors.

Rental control is a government policy, whether local or national, that aims to curb rising house prices. This policy aims to keep housing affordable, at least for the most vulnerable sections of the population. However, the policy has its critics, writes CNBC.

In Sweden, for example, rent controls have brought down the government there. In Germany, the issue was the subject of a year-long court battle.

Meanwhile, lawmakers in the Netherlands, Britain and Ireland are also having similar discussions.

There is a centuries-old tendency for people to flock to urban areas where there are more jobs and higher wages. In times of low interest rates and home help schemes, more people are buying property either as their first home or as an investment. This demand pushes prices up given the limited supply of housing.

In addition, the so-called "Airbnb effect" has worsened the situation, experts mark. Instead of selling a property or renting it out on a long-term basis, many landlords choose to provide their houses or apartments for a short stay. This means that there are fewer stocks for locals, which contributes to a further acceleration of rental prices.

Between 2010 and the first quarter of 2021, rents increased by 15.3% in the European Union, according to Eurostat.

Selected data collected by the European Statistical Office show that in 2020 the projected average levels of apartment rents are highest in Dublin, followed by Copenhagen, followed by Paris, Luxembourg, and Stockholm.

Colm Lauder, real estate manager at investment bank Goodbody, commented to CNBC that he expects rents to continue to rise. He fears that if rent controls are introduced in Ireland, capital to the real estate sector will run out and housing problems will deepen.