7 ms·

Rent control, as flawed as it may be, aims to solve a real socioeconomic problem: people being driven out of their homes and neighbourhoods by rapidly rising co

Rent control, as flawed as it may be, aims to solve a real socioeconomic problem: people being driven out of their homes and neighbourhoods by rapidly rising costs. Proponents of a free market solution to this problem point out the disincentive effect it has on building new rental housing by depressing possible profits. Getting rid of the price control should encourage building and thus, by increasing supply, keep rental prices low... BUT. Won't profits be kept low then, perpetuating the disincentive to build? I mean, If depressed profit opportunities are the problem, housing cost must rise for them to become enticing. So, as I understand it a free housing market, all other things being equal, cannot provide a solution to the "people being driven out of their homes" problem. But, please, enlighten me if I'm mistaken.

rakkhi 3y ago
All you need to understand: if rent control or price ceilings worked, why not apply it to clothes or food? I mean food should affordable to all right? This is the problem that we don't teach basic Austrian economics in high school.
- emmacharp 3y ago
  Goods are not all equals. Housing is not Food. And you did not address the problem. Or maybe you don't think it is a problem. PS: I'm well versed in Austrian economics. But theory, hypotheticals and thought experiments don't represent every real, empirical issue.
scoofy 3y ago
>Rent control, as flawed as it may be, aims to solve a real socioeconomic problem: that I was here first. FTFY. It really boils down to that. Is it a hardship? Sure, but really insidious way that rent controls hurt society is stealing from future generations to benefit folks in the present who already are being given a sweet heart deal. It does so by creating incentives to block any redevelopment. The problem with rent control is that, where it is in effect, it is the primary cause of the exact problem it is trying to solve (but only for incumbents). If we really cared about people's stability, we could simply create a system where maximum rent increases are limited, but the percentage increase goes up every year. E.g. max rent increase year 1: 1%. Year 2: 2%. Year 3: 4%, Year 4: 8%... etc. If the rent ever doesn't double, the percentage increases start over. You get prevention against wild changes in rent, and you've got about a decade before seeing potentially dramatic rent increases, but rents can still get back to market levels given enough time.
- emmacharp 3y ago
  Maximum rates of increase per year is a type of rent control. It is, where I live, based on inflation, tax increases and investment in the building. And you may have "fixed that for me" by rephrasing what I said but you also did not address what I had brought up before you fixed it up. Do you think people being driven out of their homes and neighbourhoods by rapidly increasing housing costs a problem? If so, we can discuss about the means to mitigate it. If not, I guess we'll have to agree to disagree.
  - scoofy 3y ago
    > Maximum rates of increase per year is a type of rent control. It is, where I live, based on inflation, tax increases and investment in the building. Where I live, we would call laws that allow rents to return to market-rate eventually "rent-stabilization," and laws that keep below market rates indefinitely "rent controls." I think in most of the examples we are talking about, especially in the case of Sweden, we are talking about the latter. >Do you think people being driven out of their homes and neighbourhoods by rapidly increasing housing costs a problem? They aren't being driven out of "their homes." They hold a lease to temporarily occupy a residence that is the property of someone else. Nobody likes to frame it this way, but it's what's actually happening. I want to keep people in the cities they want to live in, but not just for this generation. If we want to let people live in cities they want to live in (even people who already live there), we need to just supply the amount of housing to bring the cost down... which is doing exactly the opposite of "protecting" people in their current housing by locking it down in perpetuity. Rent-control makes perfect sense for people who receive it. When viewed through Rawls' veil of ignorance, it is obviously, wildly unjust. If we want to deal with inequality in housing, we need to deal with the monetary inequality, and not create a band-aid, like rent-control, that actively makes the problem worse in the long run. I think the main reason why rent-control is used is that people don't want their city to change, but they don't want it to become more expensive. Rent-control allows people to have their cake, and eat it too. It just comes at the price of creating a type of informal aristocracy.
    - deleted 3y ago
      [deleted]
omnimus 3y ago
I will just point out that most everywhere i know housing has been unregulated and in hands of free market like forever. And its not like it works. In bigger european cities gets to wierd situations because investors buy houses/flats as investment and know that they will make big $$$ just over time as the price of the flat increases. Renting it out is work, flat gets used (looses value) and whats worse if you (and all other investors) keep it empty you increase prices of rent/property everywher. In other words you might hurt your investment. So people keep it empty or set insanely high rent prices exploiting the desperate people looking for anything. Its crazy how many empty flats around me there are yet we are in “housing crisis”. Instead of price control first regulation we would need is not allow empty flats just laying there. Also we should accept that housing is human right and not allow it to be tool to exploit masses. So stop home speculation by for example progresively more taxing owning every home after the first one. Companies that own/manage rentals should be under extra scrutiny just like energy/water companies are. Having safe space to sleep is as much human right/need as access to water.
- emmacharp 3y ago
  These are real propositions to solve a real problem. That's the kind of discussion we need to have. A free-er market in itself only won't help urban people keep their roof.
- xtiansimon 3y ago
  “…not allow empty flats…” If mom and pop own a building and live in the building, then I don’t agree with this. But if an investment firm owns multiple properties, then yes. This seems like a useful regulation in a housing crisis. There are rules in finance specific to finance markets. Why not rules specific to housing that regulate perverse situations?

rakkhi 3y ago

All you need to understand: if rent control or price ceilings worked, why not apply it to clothes or food? I mean food should affordable to all right? This is the problem that we don't teach basic Austrian economics in high school.

emmacharp 3y ago
Goods are not all equals. Housing is not Food. And you did not address the problem. Or maybe you don't think it is a problem. PS: I'm well versed in Austrian economics. But theory, hypotheticals and thought experiments don't represent every real, empirical issue.

scoofy 3y ago

>Rent control, as flawed as it may be, aims to solve a real socioeconomic problem: that I was here first. FTFY. It really boils down to that. Is it a hardship? Sure, but really insidious way that rent controls hurt society is stealing from future generations to benefit folks in the present who already are being given a sweet heart deal. It does so by creating incentives to block any redevelopment. The problem with rent control is that, where it is in effect, it is the primary cause of the exact problem it is trying to solve (but only for incumbents). If we really cared about people's stability, we could simply create a system where maximum rent increases are limited, but the percentage increase goes up every year. E.g. max rent increase year 1: 1%. Year 2: 2%. Year 3: 4%, Year 4: 8%... etc. If the rent ever doesn't double, the percentage increases start over. You get prevention against wild changes in rent, and you've got about a decade before seeing potentially dramatic rent increases, but rents can still get back to market levels given enough time.

emmacharp 3y ago
Maximum rates of increase per year is a type of rent control. It is, where I live, based on inflation, tax increases and investment in the building. And you may have "fixed that for me" by rephrasing what I said but you also did not address what I had brought up before you fixed it up. Do you think people being driven out of their homes and neighbourhoods by rapidly increasing housing costs a problem? If so, we can discuss about the means to mitigate it. If not, I guess we'll have to agree to disagree.
- scoofy 3y ago
  > Maximum rates of increase per year is a type of rent control. It is, where I live, based on inflation, tax increases and investment in the building. Where I live, we would call laws that allow rents to return to market-rate eventually "rent-stabilization," and laws that keep below market rates indefinitely "rent controls." I think in most of the examples we are talking about, especially in the case of Sweden, we are talking about the latter. >Do you think people being driven out of their homes and neighbourhoods by rapidly increasing housing costs a problem? They aren't being driven out of "their homes." They hold a lease to temporarily occupy a residence that is the property of someone else. Nobody likes to frame it this way, but it's what's actually happening. I want to keep people in the cities they want to live in, but not just for this generation. If we want to let people live in cities they want to live in (even people who already live there), we need to just supply the amount of housing to bring the cost down... which is doing exactly the opposite of "protecting" people in their current housing by locking it down in perpetuity. Rent-control makes perfect sense for people who receive it. When viewed through Rawls' veil of ignorance, it is obviously, wildly unjust. If we want to deal with inequality in housing, we need to deal with the monetary inequality, and not create a band-aid, like rent-control, that actively makes the problem worse in the long run. I think the main reason why rent-control is used is that people don't want their city to change, but they don't want it to become more expensive. Rent-control allows people to have their cake, and eat it too. It just comes at the price of creating a type of informal aristocracy.
  - deleted 3y ago
    [deleted]

omnimus 3y ago

I will just point out that most everywhere i know housing has been unregulated and in hands of free market like forever. And its not like it works. In bigger european cities gets to wierd situations because investors buy houses/flats as investment and know that they will make big $$$ just over time as the price of the flat increases. Renting it out is work, flat gets used (looses value) and whats worse if you (and all other investors) keep it empty you increase prices of rent/property everywher. In other words you might hurt your investment. So people keep it empty or set insanely high rent prices exploiting the desperate people looking for anything. Its crazy how many empty flats around me there are yet we are in “housing crisis”. Instead of price control first regulation we would need is not allow empty flats just laying there. Also we should accept that housing is human right and not allow it to be tool to exploit masses. So stop home speculation by for example progresively more taxing owning every home after the first one. Companies that own/manage rentals should be under extra scrutiny just like energy/water companies are. Having safe space to sleep is as much human right/need as access to water.

emmacharp 3y ago
These are real propositions to solve a real problem. That's the kind of discussion we need to have. A free-er market in itself only won't help urban people keep their roof.
xtiansimon 3y ago
“…not allow empty flats…” If mom and pop own a building and live in the building, then I don’t agree with this. But if an investment firm owns multiple properties, then yes. This seems like a useful regulation in a housing crisis. There are rules in finance specific to finance markets. Why not rules specific to housing that regulate perverse situations?