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Oh for sure, it's far too simple to just impose a limit. And if any limits imposed are too punitive, as you say, they'll likely do more harm than good.
My main point is that a lot of people read this as a simple problem of mis-allocation of existing housing stock, when essentially all economists agree that the fundamental issue is a lack of total supply. London alone has added two million residents since the year 2000, and I'm very doubtful that it has also added two million new apartments.