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Originally Posted by whatnext
The price cap you refer to is for increases for existing tenants. It doesn't apply to the landlord if a tenant vacates and he re-rents the suite.
Studies don't bear that out:
....Every time rent control is proposed, the landlord-lobby communications playbook kicks into high gear with the same refrain: rent control stops landlords from building rental housing. Costs are said to be going up. Profits are never mentioned.
From Ontario last year to B.C., Illinois and California today, every time rent control is raised, armeggedon in the rental housing sector is promised.
The only problem is, there’s zero empirical evidence to back this up.
When Harris gutted rent control in the 1990s he promised “thousands and thousands of rental units” and of course, they never emerged — housing development totally flatlined.
Similarity, rent control was expanded in Ontario last year we were told the usual stories: 1,000 units were lost, projects were cancelled, and landlords would stop renting. But reality is a funny thing: one year later, far from cratering rental housing development it has surged to its highest levels in decades.....
https://www.thestar.com/opinion/cont...trols-yes.html |
New Rental doesn't magically appear or disappear, it's a long-term process and trend. You know as much as I do that new RE projects can take over half a decade to materialize.
There was a massive demand for rental in Toronto during the time rental controls were lifted. On the long term, vacancy rates soared to 4% once demand flatlined, and rent price growth dropped to 1%, until the demand started to soar again.
And in any case, none of these studies have demonstrated why rental is somehow exempt from the basic laws of supply and demand.
https://iea.org.uk/blog/we-are-the-6...-rent-controls
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Let’s have a look at how ‘unfounded in evidence’ these arguments are. Perhaps the most comprehensive review of the economic evidence on the subject is the paper ‘Rent Control: Do Economists Agree?’ by Blair Jenkins, which discusses over sixty different studies on various forms of rent control. She concludes:
“[E]conomic research quite consistently and predominantly frowns on rent control. My findings cover both theoretical and empirical research on many dimensions of the issue, including housing availability, maintenance and housing quality, rental rates, political and administrative costs, and redistribution […] “[T]he economics profession has reached a rare consensus: Rent control creates many more problems than it solves”.
“The analysis of rent control is among the best-understood issues in all of economics, and – among economists, anyway — one of the least controversial. In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that ”a ceiling on rents reduces the quality and quantity of housing.” […] Bitter relations between tenants and landlords, with an arms race between ever-more ingenious strategies to force tenants out – what yesterday’s article oddly described as ”free-market horror stories” – and constantly proliferating regulations designed to block those strategies? Predictable. […] [T]he pathologies of San Francisco’s housing market are right out of the textbook, that they are exactly what supply-and-demand analysis predicts. But people literally don’t want to know. A few months ago, when a San Francisco official proposed a study of the city’s housing crisis, there was a firestorm of opposition from tenant-advocacy groups. They argued that even to study the situation was a step on the road to ending rent control – and they may well have been right, because studying the issue might lead to a recognition of the obvious.”
The basic problem is that rents, like other prices, are messengers. A high price of X tells us that X is in short supply (relative to demand), and a low price of X tells us that there is plenty of X. A price ceiling is, however, worse than just shooting the messenger. It means forcing the messenger to tell a lie. A capped rent is a messenger, who, at gunpoint, informs us that everything is fine, and that rental properties are available in great abundance. But while we can force the messenger to say anything we want to hear, the trouble is that that does not make it any truer. The shortage is still there. It will just manifest itself in other ways.
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Even imposing strict price caps on existing rentals is shooting the messenger in this context; the prices for existing tenants artificially deflate prices overall, discouraging investment in new properties.
It also encourages landlords to kick current tenants out, if possible to take advantage of a higher-rent new tenant.
Unless, of course, all those economists are being paid for by the landlord lobby?
In which case, I guess all those climate scientists peddling climate change are being paid by the Green Energy lobby and George Soros?
You can read the paper linked in the article for yourself.
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