A Look at rent control

In many cities, rent control is enacted in order to preserve the city’s working class communities. Rents are so high that lower income workers are forced to move out. Like a wise man once said, The rents are too damn high!

With rent control, many landlords have very little incentive to maintain their properties and even less incentive to upgrade the units. I’m sure most people have heard stories about landlords maintaining units to a bare minimum, trying to force tenants out “by choice” due to substandard living conditions. This leads to properties being degraded which affects the subject’s property value but it also affects the neighborhood.

Mom and pop landlords who own few rental units for decades often lose their ability to make a living on rent controlled property because it no longer generates enough income to cover their expenses

In San Francisco, an estimated 1/12 units remain vacant because of rent control. Tenant friendly laws make it difficult for landlords to survive. However, having fewer available apartments for rent makes it difficult for tenants as well as it drives up the prices of market rent rentals.

Rent control is meant to help low income people, however, it is often the wealthy who are taking advantage of this. Some will even rent units out as weekend getaways or sublease it out as AirBNBs for a short term profit.

 

Having rent control means the government has to put in a department to oversee it. What does that mean? You guessed it, more taxes. Landlords have to pay more taxes in order to have a system that takes away their money.

In the end, developers are not enticed to these areas and the overall supply of rental properties remain stagnant.

I am not saying that rent control is bad. Just offering a different set of lenses on what outcomes rent control may actually be accomplishing.

 

20160916_rent

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s