Rent control as discussed in most introductory economics textbooks causes a rent freeze, with perhaps occasional upward adjustments which somewhat compensates for inflation. In North America, rent control was first applied during World War II, because the housing markets in many cities were overwhelmed as soldiers and their families were relocated. The policy’s goal was to ensure affordable housing and to prevent profiteering by landlords who may take advantage of the extreme market pressures (Arnott, 1995). Many jurisdictions later on dismantled the policy.
In the present day in both the United States and Canada, many jurisdictions re-introduced rent control, often as one facet of a general wage and price control program. But the form of rent control was milder. While the programs differed significantly from one another, they were often referred to appropriately as rent regulation rather than rent control. This new rent control program typically allowed rents to be increased annually by a certain percentage automatically, it also contained supplementary provisions which permitted rents to be further increased on a discretionary basis.
Housing Demand:
Houses and apartments are, in …show more content…
Many economists believe that rent control will result to reduce maintenance of the housing unit. Glaeser (2002) argues that “The landlord will let the unit’s quality to deteriorate to the point where the controlled rent is actually the market price. After all, the landlord has no incentive to make the apartment any nicer than he must in order to keep it occupied”. This provides evidence that due to low incentives of reinvestments to rental housing, Rent control policy leads to the deterioration of the quality of housing stock since landlords are faced with declining revenues and may be forced to significantly reduce maintenance and repair of existing
In the present day in both the United States and Canada, many jurisdictions re-introduced rent control, often as one facet of a general wage and price control program. But the form of rent control was milder. While the programs differed significantly from one another, they were often referred to appropriately as rent regulation rather than rent control. This new rent control program typically allowed rents to be increased annually by a certain percentage automatically, it also contained supplementary provisions which permitted rents to be further increased on a discretionary basis.
Housing Demand:
Houses and apartments are, in …show more content…
Many economists believe that rent control will result to reduce maintenance of the housing unit. Glaeser (2002) argues that “The landlord will let the unit’s quality to deteriorate to the point where the controlled rent is actually the market price. After all, the landlord has no incentive to make the apartment any nicer than he must in order to keep it occupied”. This provides evidence that due to low incentives of reinvestments to rental housing, Rent control policy leads to the deterioration of the quality of housing stock since landlords are faced with declining revenues and may be forced to significantly reduce maintenance and repair of existing