Economics in One Lesson XIV: What Rent Control Does

Posted: June 4, 2012 by ShortTimer in Economic freedom, Economics, Government
Tags: ,

From “On the Other Hand” by the western Canadian Frontier Centre for Public Policy:

Very much worth watching.  For those who haven’t Hazlitt’s book, I highly recommend it.

Very much worth noting that the effect is the exact opposite of what is intended.  With little or negative profit incentive to make low-income rentals, landlords and developers don’t make more of them, and instead build expensive housing that is profitable.  Landlords of low-income rentals often end up with bills that exceed what their housing can pay – examples of folks in big cities who’ve lived there for decades, or handed rentals off to their children mean that their rent is never inflation-adjusted, while prices in the rest of the world have changed.  Landlords then become stuck on fixed incomes and can’t maintain their properties without losing money on them.  This creates the unintentional effect of landlords who become slumlords, whether to escape from the housing that they can’t sell – because no one will buy a property that has a fixed income below the cost of repairs, or because they want the housing to be condemned and destroyed in order to free them from the financial burden of it.  Nothing good comes of rent controls any more than any other price controls.

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