Rent Control - Renters' rights, the basics
The desired benefits of rent control include protection of tenants from exploitation by the property owners. For example, due to the incidence of unequal bargaining power between the property owners and the tenants, property owners often have many alternatives while job placement and convenience may limit the choices available to the tenant. Therefore, the property owner has the ability to ask for rent depending on his view as opposed to depending on the market process (Portman & Stewart, 2009). The substandard units charge fairly high rents because of the high demand and are not properly maintained because high demand gives the owners breathing room. Therefore, the rent control laws have a negative effect on the society because they restrict quality of living apartments and result in shortage of living space for tenants.
In placing a ceiling for the maximum rent chargeable for a unit, the law seeks to protect the tenants from exploitation. For the maximum rates to be applicable and practical, they have to be below the market rates. For example, it would be unpractical and useless to have a maximum value placed at a value where the tenants would not afford (Block, 2014).
[...] Therefore, the rent control laws have a negative effect on the society because they restrict quality of living apartments and result in shortage of living space for tenants. From an economic perspective, price controls often have a negative effect on the market. They limit the role of market forces of demand and supply in determining prices of rental units and therefore upset all parties involved. For example, restricted investment in housing has resulted from price controls. The limited investment in turn leads to shortages and therefore affects the tenants negatively. Therefore, market forces should be the sole determinant of rents. References Will, G. F. (2012, February 15). [...]
[...] In addition, rent control laws are intended to protect the tenants from abnormal changes in prices. For example, the rate of inflation has been increasing over the years. Therefore, under the terms of tenancy, when a person rents a unit and agrees on the rate in rent increment, the rates cannot be changed by the property owner, even when the market forces dictate bigger changes (Will, 2012). The result is than tenants who have lived in the same houses for a long time pay significantly less rent compared to the market prices of similar units. [...]
[...] The tenant is duty- bound to compensate for any intentional or avoidable damage to the housing unit during the duration of tenancy. In addition, the laws protect the tenants from abandonment of the property by the property owners during their stay (Portman & Stewart, 2009). For example, due to the low prices in the units controlled by rent control laws, property owners may neglect to repair the property or pay for routine maintenance such as painting or necessary repair. The law protects the tenants from such incidences. [...]
[...] Rent control laws: foolish and unconstitutional. Washington Post. Retrieved October from http://www.washingtonpost.com/opinions/rent-control-laws-foolish-and- unconstitutional/2012/02/14/gIQAcZvbGR_story.html Block, W. (2014). Rent Control. : The Concise Encyclopedia of Economics. Retrieved October from http://www.econlib.org/library/Enc/RentControl.html Portman, J., & Stewart, M. (2009). Renters' rights: the basics (6th ed.). Berkeley, Calif.: Nolo. [...]
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