Renst Control: The Effects Of Rent Control

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To understand what is being discussed, one has to understand the underlying problem: rent control, as a result of a shortage of affordable housing. Rent control is defined as “a law placing a maximum price, or a “rent ceiling,” on what landlords may charge tenants” (Block, W. n.d) and is the “stated goal of preserving affordable housing for low- and middle-income families” (Blackwell, L. n.d). Rent control changes depending on the country. In this essay the effects of rent control will be discussed. Rent control prices are not determined by market forces. The price ceiling will have no effect on price or quantity of rental housing if the rent prices are set above the equilibrium price. The price of units and quantity of units supplied will be determined by demand and supply. However, if rent prices are set below the equilibrium price it will affect the price and possibly the quantity of rental …show more content…

Consumers begin to adjust to the idea of moving. Rent control provides security and the right to affordable housing. Tenants are able to occupy the space without the stress of rent increases. Rent control eliminates the control the landlord has over the tenants. However, because rent increases are allowed between vacancies, tenants may experience pressure from landlords to move out (Cruz, P. 2009). Under rent control the tenants are satisfied with the price they are paying and have affordable housing and would choose not to move because they do not want to lose their subsidy, this result in a loss in mobility. A loss in mobility would lead to social and geological problems. (Blackwell, L. n.d). In the short run the amount of rental housing supplied would remain relatively constant (supply is inelastic). The biggest disadvantage facing landlords is that, under rent control, landlords would receive less incentives and this would have a knock-on effect that would eventually change the elasticity of

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