Mexico City Caps Rents to Protect Its Urban Core: A Market Crossroads

Mexico City’s government announced tough new rules to address its fast-rising rents. Starting August 28, 2024, officials will limit rent increases to no more than the official inflation rate.

Before, landlords could raise rents up to 10 percent each year, even when wages hardly grew. Over the past decade, rents rose much faster than salaries, forcing thousands of working families out of the city center.

Today, the average rent for a two-bedroom apartment reaches almost 19,400 pesos (about $950) a month and has climbed over 14 percent in a year. Many longtime residents now move to distant neighborhoods because they can’t keep up with these costs.

The city has about 2.7 million homes, but it still needs at least 800,000 more to meet current demand. Gentrification and growth in short-term rentals, like Airbnb, have made things worse.

Many homes that once housed families now serve temporary visitors. In response, the new rules will also limit short-term rentals to half the year for any property. City officials want to stop the loss of stable, affordable homes for local people.

Alongside new rent rules, the government doubled its housing budget to 9 billion pesos (roughly $444 million) and promised 20,000 new public housing units by 2030. These apartments will charge tenants no more than 30 percent of their income.

Still, experts say only 2 percent of new homes are affordable for average families, while most new builds target higher-income buyers. In 2024, construction of low-cost homes hit a national low, with only 128,000 units completed across the country.

All new and existing rent contracts must be registered through a digital platform within 90 days of the law’s publication. The city hopes this will bring more transparency and reduce abuses, since the rental market today remains largely informal.

Mexico City faces a serious housing crunch that affects both residents and small businesses. Officials hope these bold measures will make staying in the city possible for regular people and help keep communities and local commerce alive.

If not, more families may be pushed out, raising tensions and weakening the city’s vibrant neighborhoods.