The judicial response to rent controls in Europe: Protecting property rights against state’s intervention?

Abstract

This essay examines, from a legal and economic perspective, the judicial response to rent controls in the EU focusing on three courts that operate at the fundamental rights and constitutional level: the European Court of Human Rights (ECtHR), the German Federal Constitutional Court (BVerfGE), and the Italian Constitutional Court. Based on an analysis of a sample of judicial decisions rendered over time, a convergent trend emerges: these Courts have recognized and effectively protected the landlord’s property rights against rent controls that were disproportionate and could not ensure a reasonable return on investment. This trend is prominent in the jurisprudence of the ECtHR: the Strasbourg Court has contributed to reshaping the distribution of power between tenants and landlords, encouraging the transition of Eastern and Southern European Countries to the common European housing market. In both upholding and striking down rent control measures, judges generally take market value and the comparative reference price as the preferred benchmarks for fair rent price. A consumption-based and financial characterization of housing, coupled with the fundamental right to derive economic benefits as core elements of the right to property, underpin the legal reasoning of the three Courts.