Question

1) What is good about rent control

2) What is bad about Rent Control

3) Who is Richard Thaler

https://youtu.be/bERm-50CApk

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Answer 1

Answer 1 Good about rent control are -

TENANT FINANCIAL SAVINGS

The biggest pro for tenants is the financial savings year over year. Most of us have been subject to a hefty increase at some point in our lives. Because rent control would limit the amount of legal increase, tenants are typically in favor of these laws. Some rental properties can increase 10% each year, making it difficult for someone to remain in that property without getting a significant raise or a job change.

Rent control can provide better financial stability for tenants as well. They can better plan for the future if they know their rent isn’t going to increase dramatically each year.

HIGHER LIKELIHOOD OF LEASE RENEWAL

Because rents are capped, tenants are much more inclined to stay in a property long term. Moving out of the property would mean risking a big increase in price for their next place.

This means that landlords won’t have to deal with vacancy every year because the current tenants will likely renew their lease. Vacancy periods tend to cost landlords a lot of money, in addition to having to turn the property over (almost $2,000 on average). By keeping the same tenants for a few years, you eliminate those costs.

Answer 2 Bad about rent control are

NO INCENTIVE TO UPGRADE HOME

Landlords will often update their home and appliances every few years to keep the tenants there or to attract new tenants. When a home has upgraded appliances and other features, you can often raise your rent price due to the added amenities. The same goes if you have a pool or an extra parking space.

With rent control laws in place, the incentive to upgrade the home decreases dramatically. Even if you upgrade all of your kitchen appliances to stainless steel and get all new carpet, you will still be limited to the yearly increase that the law permits. In this case, landlords are likely to keep the same appliances until they break down and then replace them with a similar or lesser model.

PRICES FALL BELOW MARKET

Rent controlled apartments and houses tend to fall below market rents. The longer the unit is rent controlled, the further it will fall behind. This means that landlords won’t make as much income from their properties as they could be. One of the primary reasons that people invest in real estate is the long term financial benefit. With rents capped at a certain amount, it’s harder to reach their financial goals. They might not even invest to begin with.

Additionally, they’ll have less money to cover needed maintenance on the property and will likely want to defer it as long as possible. The needed repairs and touch ups when a property becomes vacant (as well as during tenancy) can easily detract from the monthly rental income.

OLDER BUILDINGS

While rent control usually favors the tenants, they should keep in mind that most rent controlled properties are older units. While you might be getting a good deal on rent, you likely won’t have the same amenities that non-rent controlled apartments have. Current rent control laws mostly apply to units built prior to 1985. If you’re set on an upgraded apartment or newly built unit, you might be out of luck.

Answer 3

Richard H. Thaler is the 2017 recipient of the Nobel Memorial Prize in Economic Sciences for his contributions to behavioral economics. Thaler studies behavioral economics and finance as well as the psychology of decision-making which lies in the gap between economics and psychology. He investigates the implications of relaxing the standard economic assumption that everyone in the economy is rational and selfish, instead entertaining the possibility that some of the agents in the economy are sometimes human.