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> Rent control means the end of new supply from the market. Can you explain why you think this? The way I see it, rent control just means that property develop

> Rent control means the end of new supply from the market. Can you explain why you think this? The way I see it, rent control just means that property developers will have to wait a little bit longer before their investments start paying off. They're still making massive amounts of profits, it's just a little bit less. The benefit of rent controls means that overall people will have more money to spend, which benefits the overall economy. In my opinion it makes perfect sense.

j7ake 2y ago
You can imagine that a rent control set such that it will lose money for every property owner. In this case, there will be zero property owners who will offer their place for rent, leading to zero places available to rent.
- legacynl 2y ago
  yes indeed if rent controls would limit rent to 10 dollars a month then all landlords will be quickly out of business. but that is obviously not how it works
dagw 2y ago
If you're a property developer building an apartment building you have two choices, either sell the apartments or rent out the apartments. In an ideal free market economy the rental and sales prices for these apartments will be such that the profit from either will be the same and the supply of either type of apartment will be driven by the demand of that market. However if you cap rental prices and don't cap sales prices, then it will never be more profitable to rent out an apartment compared to selling the same apartment, so property developers will only build apartments to sell rather than to rent. If you want new rental apartments and rent control you have to use some kind of additional carrot and/or stick to compel property developers to pick the less profitable option.
- legacynl 2y ago
  I understand that from a purely economic/free market perspective rent controls are a bad thing. But for an 'ideal free market' to exist there are some requirements that in the real world don't apply. In an ideal free market consumers are fully informed, logical and able to say no to a bad price. In the real world, especially when it comes to necessities, consumers often don't meet these requirements. People need housing, they cant sit around waiting for the market to adjust. If you live in an area with children you can't just pack up and leave when a cheaper option becomes available or the landlord decides to increase the price. In the real world there is a big imbalance in the power between consumers and suppliers when it comes to housing. Paradoxicaly rent controls are a tactic used to empower consumers in an effort to balance the scales, exactly so the real world might approach that 'ideal free market'
  - dagw 2y ago
    The core problem is that if you implement rent control, without a bunch of other policies, all you achieve is to remove potential rental apartments from the market. Either they'll never get built or rental apartments will be sold off and removed from the rental pool once rents drop below a certain relative level compared to the potential sales price for the same apartment (or apartment building). Rent control is fine, if the government at same time steps up and implements policies to make sure that rentable apartments at the rent controlled price are actually available on the market. Rent control makes no difference to me if the end result is that it is completely impossible for me to rent an apartment at any price. I've lived in places with and without strict rent control, and the biggest difference was that in the place without rent control I could easily find several places to rent in the parts of the city I wanted to live in.

j7ake 2y ago

You can imagine that a rent control set such that it will lose money for every property owner. In this case, there will be zero property owners who will offer their place for rent, leading to zero places available to rent.

legacynl 2y ago
yes indeed if rent controls would limit rent to 10 dollars a month then all landlords will be quickly out of business. but that is obviously not how it works

dagw 2y ago

If you're a property developer building an apartment building you have two choices, either sell the apartments or rent out the apartments. In an ideal free market economy the rental and sales prices for these apartments will be such that the profit from either will be the same and the supply of either type of apartment will be driven by the demand of that market. However if you cap rental prices and don't cap sales prices, then it will never be more profitable to rent out an apartment compared to selling the same apartment, so property developers will only build apartments to sell rather than to rent. If you want new rental apartments and rent control you have to use some kind of additional carrot and/or stick to compel property developers to pick the less profitable option.

legacynl 2y ago
I understand that from a purely economic/free market perspective rent controls are a bad thing. But for an 'ideal free market' to exist there are some requirements that in the real world don't apply. In an ideal free market consumers are fully informed, logical and able to say no to a bad price. In the real world, especially when it comes to necessities, consumers often don't meet these requirements. People need housing, they cant sit around waiting for the market to adjust. If you live in an area with children you can't just pack up and leave when a cheaper option becomes available or the landlord decides to increase the price. In the real world there is a big imbalance in the power between consumers and suppliers when it comes to housing. Paradoxicaly rent controls are a tactic used to empower consumers in an effort to balance the scales, exactly so the real world might approach that 'ideal free market'
- dagw 2y ago
  The core problem is that if you implement rent control, without a bunch of other policies, all you achieve is to remove potential rental apartments from the market. Either they'll never get built or rental apartments will be sold off and removed from the rental pool once rents drop below a certain relative level compared to the potential sales price for the same apartment (or apartment building). Rent control is fine, if the government at same time steps up and implements policies to make sure that rentable apartments at the rent controlled price are actually available on the market. Rent control makes no difference to me if the end result is that it is completely impossible for me to rent an apartment at any price. I've lived in places with and without strict rent control, and the biggest difference was that in the place without rent control I could easily find several places to rent in the parts of the city I wanted to live in.