Rent control requires landlords and property owners to charge a preset price for their rental units. The purpose is to keep rates affordable for lower-income people, and to prevent landlords from raising rates for existing tenants to exceedingly high levels. While some feel that landlords are being unfairly prevented from making a bigger profit, others believe the practice is necessary to keep housing affordable. Here is a look at some of the pros and cons associated with rent control.
Pro: Affordable Housing for Low-Income Families
One benefit of rent control is that allows people earning low incomes the opportunity to live in housing that they would not be able to afford otherwise. In some cases, rent control means the difference between having a place to live and being homeless. It also protects them after they become tenants because landlords cannot arbitrarily raise rents as a way of forcing out tenants and charging higher rents to new tenants.
Con: Poor Upkeep
Because rents are often kept lower than the market might dictate, landlords may not receive adequate income to operate efficiently. Consequently, they might not be able to afford routine maintenance, which could lead to their properties falling into disrepair, thus lowering their value. Eventually, the landlords might not be able to keep up with mortgage payments and might be forced to sell or abandon their property.
Pro: Keeping Neighborhoods Stable
Rent control can also help preserve the stability of neighborhoods. If rents are kept under control, tenants would be less likely to seek other housing, which would prevent the high turnover rate that can occur in noncontrolled rental areas. Long-term tenants would also be more likely to maintain their properties, which could prevent landlords from charging exceedingly high rates.
Con: The Opposite of a Free-Market System
Since landlords are limited to the amount of rent they can charge, their ability to make a profit could be hindered. In theory, this flies in the face of the precepts of a capitalistic society, which normally places few limits on the amount one can earn. It could result in investors in the housing market seeking out more potentially profitable areas in which to place their money.
Pro: Maintaining or Improving Standard of Living
Since they do not have to be concerned with continuously rising rent expenses, tenants could use the money for other areas of their lives, such as investing, saving for a child's education or saving for a down payment on a home.
Con: Housing Shortages
Rent control could result in a shortage of available housing because lower rents could increase the demand for rental units. But because landlords cannot increase the amount of the rents they charge, they might be less inclined to build more housing, resulting in a perpetual shortage. This could then result in landlords in neighboring noncontrolled areas to raise the rents because demand would be higher.
