What are the effects of rent control, both good and bad?
In: 257
Good; maintains rent, despite profit motive to constantly increase it to the limits of the markets ability to bear. Less homelessness, because prices aren’t constantly rising beyond renters ability to pay.
Bad; reduces profit margins for investors, so they tend to release less of their money towards new builds. In the long run, if the rent control isn’t handled as a holistic thing, you create a situation where people can survive where they are, but nowhere else, and new people are screwed, because the private sector doesn’t build as many homes.
Seeing as it’s rare that Rent Control gets passed as it’s own thing, and that exists in an economic context, it’s a fairly complex issue.
Long story short, it’s never a long term fix, but it buys you time to implement something more sustained, like social housing commissioned by the Government, which acts as a competitive counterbalance to price-gouging in the private market.
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