Question

What kind of market situation is a rent control, and what problems do they actually create? If rent controls are so counterproductive, why do cities impose them? How else might housing problems of poor people be solved?

Answer 1

Rent control means that price control of the apartment market. The major problem for the rent control is the shortage of apartment to the buyers. The result is some buyers are left out from the market because they despite willing to buy at the current market price. So the apartment owners are not ready to rent their apartment at the current market price.

The rent control is counterproductive in apartment owners. Still, rent control benefits the seekers because it prevents an unnecessary increase in the rent of the house. It limits the rent under a certain point rather than increasing it.

The housing problem of the poor exists everywhere in the world. The urban poor is mostly affected by the lack of affordable houses because of the additional development of the government. Improper reallocation is a major problem in urban cities. To solve the problem of lack of housing in poor people, the government could construct new houses, modify existing houses with community participation.