Why Rent Control Does Not Work

Via Nathalie Elgrably on x.com

Here's a 60-second economics 101 lesson.

1. People respond to incentives.
2. Tenants and landlords are people. They therefore respond to incentives.
3. Price is an incentive.
4. When the price of a good decreases, consumers are incentivized to demand more of it.
5. When the price of a good decreases, sellers are incentivized to sell less of it (because it's less profitable).
6. Rent is a price. And therefore rent is also an incentive.
7. Keeping rents low encourages demand for housing from tenants.
1. Existing tenants cling to their housing to take advantage of frozen rents, even if it no longer fits their needs.
2. Result: less mobility, fewer opportunities for young people or immigrants.
8. Keeping rents low discourages the supply of housing from landlords.
1. Landlords no longer have an incentive to maintain or renovate, since every dollar invested will never be recouped. The quality of the rental housing stock deteriorates.
2. Landlords make up for their shortfall by charging exorbitant "application fees," huge security deposits, or by selecting only "low-risk" tenants.
3. New investors steer clear of the rental market, discouraged by the limited profitability.
4. Result: fewer housing units available for everyone.

Thus the housing shortage worsens. And we end up harming precisely those we initially wanted to help, namely the most vulnerable.

Every experiment with rent control has produced the same result.

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