We’ve seen various overlapping stages of “inflation grief” in politics. The denial it was happening. Then claims it was “transitory.” Later we were told that central banks could do little about supply-led inflation anyway and more recently that taxpayer relief could mitigate it. Now, depressingly but predictably, some politicians are even reaching for price controls to counter it.

Nicola Sturgeon’s price control of choice is to freeze rents until March 2023 in Scotland. This cannot counteract the pandemic money supply surge or war-induced supply shocks, so can’t “solve” our macroeconomic problem. What it and her concurrent eviction moratorium will do is what rent controls always deliver: shortages of rentable properties, worse landlord-tenant relations and gummed up labour markets. Hence why polls find 95 per cent of economists oppose rent ceilings.

Decades of academic research shows that capping rent increases below market rates results in demand outstripping supply for rental accommodation. Incumbent tenants cling more tightly to their cheaper property, meaning fewer dwellings on the market, longer searches and underhand payments or favouritism to allocate the scarcer accommodation. Less tenant churn means many households simply can’t find properties reflecting their family or job needs, lowering economy-wide productivity. In response, certain landlords skimp on upkeep to maintain their margins, much to tenants’ chagrin.

The main effect is a decline in the quantity of accommodation supplied. Building new rentable properties becomes less profitable and riskier. Rather than take a financial hit or risk being stuck with undesirable tenants, some existing landlords convert properties to short-term Airbnb-type rentals or sell for owner occupation, to the detriment of poorer households, who can’t afford deposits for property purchases.

Sturgeon’s policy is notionally temporary, making the balance of the benefits to incumbent tenants against these negative consequences seem more favourable. Yet the Scottish government was consulting on rent controls already and history shows controls stick around in practice. Rent controls were temporarily introduced in Britain in the First World War; rents were fully deregulated again only in 1989. In the interim, the private rented sector collapsed from nine tenths of the housing stock to almost one tenth.

Recent experiences show that new rent controls can have destructive effects quickly, too. Last November St Paul in Minnesota in the United States voted to cap rent increases to 3 per cent per year from May. Permits for new housing units have fallen by 31 per cent already, compared with a 35 per cent increase in nearby, control-absent Minneapolis. The divergent trend in construction is greater still.

Before being struck down by the courts in April 2021, Berlin froze rents at 2019 levels for five years. The Munich-based Ifo Institute for Economic Research found the number of new rental properties available fell by almost half in one year, despite increasing across thirteen other large German cities without controls.

True, some prosperous cities utilise “second-generation” rent controls to give tenants more near-term security at lower cost. These limit rent rises within, say, three-year tenancies but allow freely set rents between them, so bring less economic dysfunction, albeit still reducing supply if perceived by developers as being the thin end of the wedge.

Yet economists agree that Sturgeon’s rent freeze or similar crude controls reduce the availability of rentable properties and misallocate accommodation. That such misguided ideas are in vogue is an underappreciated cost of letting the inflation genie out of the bottle.