NCPA - National Center for Policy Analysis

What's Wrong with Rent Control?

November 20, 2014

Price ceilings on rent for apartments in large cities have dangerous economic consequences, asserts Robert Murphy, research fellow at the Independent Institute.

Rent control is a policy whereby a city sets a ceiling price on the rent that a landlord can charge a tenant. Many people think the policy sounds great, because it keeps prices low, making housing more affordable. But Murphy explains the laws have a series of unintended consequences:

  • They create apartment shortages. If prices are lowered, the demand for rental housing will rise, and tenant demand will not match up with apartment supply. In the long run, rent control tends to keep developers from constructing new apartment buildings because other projects -- those without price ceilings -- are likely to be more profitable.
  • They reduce housing quality. Because rent control increases housing demand, landlords are disincentivized to maintain their properties (replacing broken appliances or light bulbs, for example) or update them, because they have a steady supply of potential tenants.

While many promote rent control as a way to provide cheaper housing for low-income residents, Murphy says the policy only reduces the supply and quality of housing, reducing the profitability of the real estate industry and creating a more dangerous environment for consumers.

Source: Robert P. Murphy, "The Case Against Rent Control," Foundation for Economic Education, November 12, 2014. 


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