What are the effects of rent control, both good and bad?
In: 257
Depends on the situation.
If you have so few houses available and something preventing construction (like zoning laws) then not much. You won’t be getting new housing anyway.
If the rent is set too low you get selloffs and rentals come off the market and become permanent housing.
A claim is often that it reduces housing supply, but generally that isn’t the case since it’s rentals becoming permanent housing. Nobody tears down a house because they can’t rent it at a higher rate. The house is still there. That’s typically followed by saying that it stops new housing from being built but that’s generally also not true since rental caps are rarely set low enough that the rentals aren’t still a good investment.
In an efficient market where there aren’t any other barriers to building houses and the rent control is set at a low value it can impact housing quality and availability.
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