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How does rent control work?

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asked Aug 14, 2015 in Real Estate by blueskies (57,070 points)
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How Does Rent Control Work?

 

Though exact regulations vary among the cities where it is implemented, rent control basically works by limiting the amount a landlord may charge for rent as well as the amount by which he can increase the rent over time. Not all areas have rent control though; it is typically found in areas with high populations. [1] The purpose of rent control is to make housing more affordable, but for some people, the opposite is true.

 

Drawbacks to Rent Control

 

There are always exemptions and exceptions in areas that enforce rent control, so there are still many rental units it doesn't apply to, and those not lucky enough to find themselves in rent-controlled housing may end up paying more to keep a roof over their heads. If a market's rental rates grow faster than the juristiction's imposed cap, landlords may cease renting in that area, creating a housing shortage that further increases market rates. [2]

 

Still another drawback to rent control is that it decreases or stagnates the value of real estate, which is generally determined by how much revenue the property generates. In turn, this brings less property tax revenue to local communities, since those taxes are calculated by property worth. 

 

1. http://homeguides.sfgate.com/rent-control-8393.html

 

2. http://everydaylife.globalpost.com/pro-cons-rent-control-31970.html

answered Aug 15, 2015 by Alexis Arden (43,230 points)
selected Aug 17, 2015 by blueskies

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