I go over how rent control ruins cities.
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#rent #rentcontrol #austrianeconomics #mises #rothbard
How Rent Control Ruins Cities
With so many struggling to pay their rents and mortgages due to the government shutdowns and lockdowns in 2020, some have suggested that rent control, that is, government controlling the price of rent, is a solution to help people out.
Rent control is not only an unethical threat of force by the government against those who have property, but it also ends up destroying cities precisely because it prevents developers from being able to capture higher demands and fund maintenance, improvement, and expansion.
When the government sets the price of rent, the costs of ownership do not go away. Owners still must deal with property maintenance, taxes and tax increases, and inflation due to state printing of money, spending, and debt.
Rent control limits property owners’ ability to improve services and disincentivizes developers in building new, better facilities to attract those moving into a popular area.
With owners’ hands tied, buildings often suffer because owners cannot raise rents to newcomers as needed to pay for expenses or renovations.
Those who would be willing to pay more because they value the area are often shut out because there is little incentive to improve or expand and capture higher demand if the prices are limited.
The most common emotional appeal for rent control is for those living on a fixed wage, such as retirees or those living on disability. Even though those are real concerns, the state setting rent controls does not solve the underlying issues of price increases and cost-of-living increases due to state action.
So, while empathetic charity is great for those in need, making it harder to fund improvements and expansions does not help those in need in the end. Without the ability to recoup expenses on maintenance and new developments, rent control ends up hurting the poor in the long-run as the development that springs from popular areas growth is stifled.
Services become limited and buildings become dilapidated over time.
The ethical solution to dealing with housing affordability is for the government to step out of the way and allow for more development opportunities so that a diversity of options can emerge catering to those in need.
Without the freedom to make improvements for growth and set prices with demand, the development for the future that enriches everyone through more housing opportunities comes to a grinding halt.