Who rent control helps, how it hurts renters, housing supply

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Rent control is promoted as fix rising home costsbut decades of data show it creates shortages, discourages new construction and hurts renters and small landlords.

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Sowell explains that for every benefit to which one person is said to have a “right,” another person must be forced to provide it—whether it be landlords providing housing at below-market prices or health care workers offering services without fair compensation. This, he argues, violates the principle of voluntary exchange and individual freedom. In essence, the creation of a “right” to housing by rent control forces landlords to provide services on terms that prevent them from covering costs, reinvesting or even maintaining their properties.

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In short, goals rent control and its actual consequences are at opposite poles.

How rent controls are stopping new housing construction

When apartment rentals become an unprofitable proposition, it dramatically reduces the likelihood that anyone will build new rental housing, whether to replace aging apartments or to accommodate a growing population. Three-quarters of San Francisco's rent-controlled housing was built before 1950. Again, this is not typical for San Francisco. Nothing stops private development like rent control. The housing shortage follows rent controls in cities across the United States, as well as in Europe, Asia and Australia.

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Places like the Beaches contribute to the problem because they have restrictions on the height of buildings they allow to be built or try to stop construction.

Artificially low rents distort housing use

When rents are artificially low, renters will use more available housing than in a naturally regulated market. For example, many young people tend to live with their parents, and some even stay after college. However, young people will be keen to find their own home when rents are controlled. Why not? They can afford it now.

Market urbanism offers an example: imagine a young married couple, Fred and Wilma. When they got married, they moved into a one-room apartment. Then, when their son Barney was born and they needed more space, they moved into a three-bedroom apartment. After Barney left for college and began gainful employment, Fred and Wilma moved back into the one-bedroom apartment. That way, they could reallocate their rent money to travel, movies, and fancy dinners.

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However, in a city with rent control, Fred and Wilma would behave differently. When their son is born, they will move into a three-bedroom apartment. But when Barney left for school, they did not move to a smaller apartment, since they bought a larger apartment at a price much lower than the market price. If they moved, they would have to pay more money for less space. Indeed, they have no motivation to move. Fred and Wilma weren't the only ones who behaved this way; it will happen all over the city. When new, growing families start looking for a place to live, they will struggle to find suitable housing. Any housing they find will be prohibitively expensive. On the other hand, older couples who are likely to be more financially stable will still be living in affordable apartments that they no longer need.

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Wider impact on cities

As an article from New York Times As you can see, during the Great Depression, more apartment buildings were built in New York than now, which is a result of rent controls.

Rent control causes buildings to deteriorate and then the people who implemented rent control blame the landlord.

Policies aimed at making housing affordable for the poor have ultimately resulted in a reallocation of resources toward housing affordable only to the rich or wealthy, as luxury housing is often exempt from rent controls.

Who Does Rent Control Really Hurt?

Sowell argues that rent control is often presented to the public as an attempt to suppress rich people in order to help the poor (who outnumber the rich and thus push for the law to be passed). But landlords in rent-controlled areas owned by poor people are not always wealthy, have their own mortgages, or have to spend time maintaining their properties. Thus, these middle-income people also suffer from rent control as they have to manage their time and are often unable to continue maintenance. This leads to worse and worse conditions for those living in these rent-controlled properties.

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