AMPI Urges Rethink of Mexico City’s “Bando 1” Housing Decree

As Mexico City’s government intensifies its efforts to curb gentrification and rising housing costs through the recently announced “Bando 1” decree, the Mexican Association of Real Estate Professionals (AMPI) is urging authorities to reconsider key aspects of the plan, warning of potentially counterproductive consequences.

“Bando 1: Por una Ciudad Habitable y Asequible con Identidad y Arraigo Local,” issued by Mexico City Mayor Clara Brugada, is a housing policy that includes rent controls, anti-eviction measures, the creation of a Tenant’s Ombudsman Office, and restrictions on short-term rentals. The objective is to curb the displacement of long-term residents from central neighborhoods and promote spatial justice, urban equity, and inclusive development.

In response to growing displacement and housing inequality, Bando 1 establishes 14 major actions including:

• Tenant Advocacy Office to legally support tenants.

• Capping annual rent increases to inflation levels.

• A master plan for “zones of real estate tension,” aimed at reversing displacement through participatory urban planning.

• Doubling the city’s housing budget to expand public housing and rental units for youth and vulnerable groups.

• Index of Reasonable Rental Prices and a proposed Fair Rent Law to regulate excessive rent spikes.

• Strengthened controls on short-term rentals and reclassification of housing converted into tourist accommodations.

“We want a city that does not exclude its people. That is why we are acting now, so communities are not forced to leave their neighborhoods,” says Brugada.

President Claudia Sheinbaum backed Brugada’s initiative, calling it a holistic approach: “It is not just about capping rent. It is about a structural strategy that lets people stay where they have lived all their lives.”

But in a statement shared with El Economista, AMPI, led by Karim Oviedo, criticized the rent control approach, stating it has failed in multiple global cities. The organization cited data from Paris, where housing investment dropped 32% between 2015 and 2023 following rent caps. In the European Union, 68% of frozen rent cases in countries like Germany, Sweden, and France have led to legal disputes, according to a 2023 European Commission report.

“Freezing rent prices does not solve the problem. The core issue is the severe shortage of affordable housing in Mexico City and its Metropolitan Area, an estimated deficit of over 350,000 housing units, according to CONAVI data,” says AMPI.

A Call for Constructive Reform

Rather than opposing the government’s goals, AMPI expressed alignment with the intention of securing dignified and accessible housing. However, the group proposed five alternative policy measures:

1. Land Bank with Dynamic Subsidies: Sell public land at a 30% discount to developers that commit to allocating at least 50% of units to rentals under MX$8,000 (US$429) per month.

2. Accelerated Housing Supply Law: Fast-track approval (within 90 days) for projects with over 40% affordable housing.

3. Government-Backed Rent Guarantee Fund: Provide up to six months of rental coverage for vulnerable tenants.

4. Vacancy Tax: Apply an 8% property tax hike on units left vacant for over a year, similar to Vancouver’s policy.

5. Mexico City Rent Observatory: Launch a public platform for real-time data on rental prices and availability.

An International Warning

The Cato Institute reports that rent controls tend to reduce rental housing supply, as landlords shift toward short-term rentals or convert properties for owner occupancy. This exacerbates affordability issues, particularly for lower-income tenants.

US and EU cities offer cautionary tales. In Minnesota, new construction permits dropped 31% in St. Paul following a 3% rent cap, while Minneapolis, which has no such restriction, saw a 35% increase. Berlin’s 2019 rent freeze resulted in a 50% drop in rental listings within one year, according to the Ifo Institute.

Toward a Balanced Housing Strategy

Mexican authorities recognize that gentrification is a complex, multi-causal issue driven by speculative real estate practices, land-use changes, digital platforms, and global investment patterns. “Justice in housing must be a guiding principle,” says Brugada, noting that inclusive development requires new social and territorial equilibriums.