Rents in Mexico City: A Historical Perspective and Current Challenges

Rents in Mexico City, home to approximately 9 million residents, have been largely stagnant since the 1940s due to fixed-rent laws. These regulations have persisted for decades, particularly affecting older buildings. Recent legislative changes have raised questions about whether landlords will be permitted to increase rents for property improvements, but the impact seems limited to a few tourist-heavy neighborhoods. Legislator Martha Soledad Avila Ventura from the Morena party noted that higher-income individuals are increasingly willing to pay more for housing, exacerbated by the rise of short-term rentals that prioritize profit over long-term residents. The city is grappling with a severe housing shortage, with estimates indicating a need for around 800,000 additional units. The real estate market has become fiercely competitive, with property prices soaring beyond inflation rates. While there are approximately 2.7 million housing units in the city, the reliance on private developers for new construction raises concerns about the potential deterrent effect of the new law on investment in residential projects. Historically, rent control in Mexico City has led to significant market distortions. The fixed-rent laws of the 1940s resulted in rents becoming negligible in real terms, prompting landlords to favor foreign tenants who were less likely to invoke tenant protections. Although the government constructed large housing complexes in the mid-20th century, these were typically sold rather than rented, leaving a gap in affordable rental options. Currently, the city government lacks a comprehensive plan or resources to build a substantial number of rental units, leaving the poorest residents with limited access to new housing developments.