The Effects of Rent Control on Housing

Abstract

Rent control is the law that is established to keep tab on the prices of rent of residential houses. This may be understood as the ceiling on the price of residential houses. The practice is common not only in some of the cities in Unites States of America but in another forty countries across the globe. Some of the major American cities have been practicing rent controls for past few decades. The best known example of this is New York. It has been observed that rend controls have social, economic as well as moral effects on society. For instance, rent controls lead to deterioration in the quality of housing. The paper presents a comprehensive discussion on the effect of rent control on the quality as well as affordability of housing.

The Effects of Rent Control on Housing

Introduction

Some of the major American cities have been practicing rent controls for past few decades. The best known example of this is New York. It has been observed that rend controls have social, economic as well as moral effects on society. For instance, rent controls lead to deterioration in the quality of housing (Luttmer, 2003). This has been found to be true particularly for rental housing. However, the effects of rent control on housing are not that so straightly determined. Research has revealed results that are not only difficult to understand but also convoluted and contradictory. Rent control is a macroeconomic factor and should be studied as such.

The paper presents a comprehensive discussion on the effect of rent control on the quality as well as affordability of housing.

Rent Control

Rent control is the law that is established to keep tab on the prices of rent of residential houses. This may be understood as the ceiling on the price of residential houses. The practice is common not only in some of the cities in Unites States of America but in another forty countries across the globe. However, the laws that pertain to rent controls are not the same in all the countries.

The concept of rent controls in the US dates back to World War I whereby the aforementioned was implemented out of public pressure and pressure from other local committees that were against profiteering from rent. The law was adopted by many cities between 1919 and 1924 (Block, 2002). The cities that had larger tenant population followed the bandwagon and adopted eviction control laws and rent laws to protect the rights of tenants and put a cap on rentals. These include the New York City, Washington, California, Oakland, and San Francisco.

The New York City stands as an example of rent controls whereby the Rent Stabilization Law of 1969 was implemented as a consequence of inadequate supply of decent housing for the people of the city. Over time, this has been criticized by various people such as economist and developmental economists of legal and economic grounds (Marks, 2006).

The underlying objective of rent control laws in the US ...