Why Rent Control Doesn’t Work

Have you ever wondered why rent control almost never works out in the long run?

When rent control is in effect, it lowers the value of lower-to-middle class apartments. Why? Because when you do so, it forces the landlord or landlady to accept lower rent. If you were a landlord or landlady that is just scraping by, and the government forced you to accept the lower class (most of the time) renters, would you have much of an incentive to keep your apartment up to date? Would you have an incentive to fix that leaky faucet if you knew that it would increase the value of your apartment at all? Most people wouldn’t.

Let’s say you’re a builder. Would you want to build a building that is destined to be a low-paying apartment building? Or, would you build an upper-class, rent control free, high-paying luxury suite building? Of course the latter. But what does that do to the supply of upper-class luxury suites? Well, it makes the collective price go down (This is because of the laws of supply and demand, which I will address in a later article) while diverting material from making lower-class apartments. This, in turn, decreases the availability of that class of apartments in general. This means that if you are wealthy, the same size suite that you previously occupied is now less money per month than before.

So, rent control actually does the opposite of what the government means for it to do. This is yet another example of a failed government policy that increases the size (and thus the taxes) of the government.

I hope you enjoyed this blog post as much as I enjoyed writing it. If you have any questions or even pushback I would love to talk with you. Just put a comment down below or subscribe to my email list.

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