Rent Control- Price Ceilings Rent Term Paper

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That is, the implementation of this regulation there will be an increase in the rent of uncontrolled apartments.

The second most important argument for the non-implementation of the rent control policy relates to the quality of the lodgings. They have two sub-arguments for claiming that the quality of the housing in a rent controlled area is poorer than the quality of the housing in an uncontrolled area. Firstly, in a rent controlled area owners may not receive sufficient money in order to satisfactorily preserve edifices. This leads to the existence of run-down, below standard housing. Secondly, since the supply is continuously low, owners may not be troubled by occupants parting, thus leading to slight or no motivation at all to preserve the property, letting the building to deteriorate itself and blaming it on the lower rental income.

Moving on to another important negative effect, we can notice that rent control policy constitute the main reason for turning away new construction. Banks and owners are afraid to invest in the building of new edifices either because they are afraid that only a few years after the construction of new buildings, these will enter under the rent control policy or because they are to a certain extend sure that they will not be able to reimburse their investment.

Fourthly, due to the fact that the rents are low, rent-controlled housing are held responsible for the complicatedness of finding available accommodation, thus resulting in a power disproportion among landowners and renters. Moreover, due to the fact that renters are acutely underprivileged if they have to change their residence, landowners can impose various conditions and requirements.

Finally, the last argument comes in opposition with the initial idea of rent control regulation. Especially in New York, numerous people rent out their rent controlled apartments in order to make a profit. Moreover, "a rent control board or regulatory agency may be captured or politically influenced by the land owners, and may be able to influence the regulatory process or 'game the system'." This influence would be obvious in such a way that an increase in the rent-controlled areas would make the rent achieve higher rates than "

Last but not least, people opposing this policy have one important quote in their favor, although it is not strictly about American Cities: "Speaking in 1989, Vietnam's Foreign Minister Nguyen Co Thach said: 'The Americans couldn't destroy Hanoi, but we have destroyed our city by very low rents.

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We realized it was stupid and that we must change policy."

If we try to summarize the ideas of this research we will see that there are important pros as well as numerous cons against the rent control policy. The general idea of the implementation of this policy is that it is not economically productive, resulting in disequilibrium in the market rather than tending towards a balanced market. However, the government sustains that if we were too think at such small scale we are not taking in consideration all the advantages of such a policy at a national level, advantages which outweigh the individual shortcomings.

In order to consider some possible adjacent means to tackle this sensitive situation a number of specialists have considered the following: as a replacement for of urging a sudden termination of controls, they have considered merely to permit property-owners to "buy tenants out of their controlled dwellings." This proposal is, however, seen as ridiculous and absurd at the same time due to the fact that the number of renters is bigger than the number of property-owners. Moreover, tenants consider that the rent control policy is on their side, thus they will devote substantial political energy in preserving the regulation.

However, this buying off does not assure property owners that a new rent control policy will not appear in the future. According to the same specialists, the safest way to hearten private investment is to signal investors that housing will be safe from rent control, that is "to eliminate the possibility of rent control with an amendment to the state constitution that forbids it."

In order to sum-up our research, at the beginning of this paper we stated that the goal of the rent control policy is to make housing affordable and available to the poor. According to Henry Hazlitt, this goal can be "accomplished more efficiently by the same free market that created the affordable units in the first place, or by government construction or subsidy if free market mechanisms alone are deemed insufficient.".....

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