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How rent controls affect housing markets
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School of Business |
Bachelor's thesis
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en
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24
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Rent control policies are usually viewed to be more harmful than beneficial and most economist agree that rent controls results in for example decreased quality and quantity of housing. This paper aims to give the reader an introduction to how rent controls can be applied to housing markets and how they affect housing markets after imposing them. I first start by examining textbook frameworks that try to model the effects of rent controls and from there continue to review relevant literature on the subject. The research done on the topic seem to suggest that the theoretical framework and its proposed effects seem to hold. That is rent control is seen to decrease available housing, decrease quality of housing and can have spillover effect to the uncontrolled sector.
However, some of the assumption in the theoretical model can be challenged and some issues in the empirical studies can be noted. Thus, it might be more suitable to judge each rent control policy individually and determinate if their benefits outweigh their adverse effects on case-by-case basis.