Does rent control work?

Economics Observatory have just published an article on rent controls.

Although aimed at the Scottish market, it makes some interesting points in general.  A summary of the points made are:

  • when rent control policies cover disadvantaged minority populations, these policies can help foster racial diversity in affected areas.
  • there is also evidence that rent control can have large negative effects on the rest of the rental market
  • landlords substituted to other types of real estate (such as properties exempt from rent control). This lowered the housing supply and shifted it towards less affordable types of housing, leading to rents rising at an even higher rate.
  •  a deterioration in housing quality resulting from landlords’ reduced inclination to  pay for upkeep of rent-controlled housing, decreasing the value of other (even uncontrolled) properties in the area
  • Another important consideration is that rent controls can lead to mismatches between tenants and housing units. Once rent control is imposed on a property, the tenant might choose not to move away in the future (this would mean effectively giving up rent control) even if their housing unit is no longer appropriate for themThis can lead to, for example, single households living in large apartments, or large families living in small studios.

The article can be seen here.




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