Question

Which of the following is not a characteristic of governmental rent controls?

A. Equitable distribution of apartments.

B. Excess demand for apartments.

C. Fewer newly built apartment buildings.

D. Very low vacancy rates.

Answer 1

Government rent control is an administrative or government measure to basically enforce a limit on the rent amount that the landlords can charge for renting or leasing residential accommodations. The rent control is generally put or enforced by the government below the equilibrium rent in the market for rental properties or accommodation thereby creating a shortage of rental accommodations in the market as at the rent control the quantity demanded of rental accommodation by the renters exceeds the quantity supplied of rental properties and accommodation by the landlords implying an excess demand for rental accommodation in the market. This also indicates that rent control is a deterrence for the landlords to built new apartments or rental properties as as the revenue or the rent obtained by them at the rent control is not sufficient to finance the construction of and adequately and appropriately maintain the newly built apartments and houses. Therefore, the supply of rental accommodations is not proportionate with the market demand for the same. As the market rent under rent control is too low, it is also difficult to properly maintain the existing houses and properties and the relatively lower rent would attract the tenants to fill up the available apartments available for rent under rent control resulting in low vacancy for rental properties or apartments. Hence, under rent control, the supply or distribution of rental apartments and accommodations is not optimal or equitable. Therefore, the answer, in this case, would be option A. given in the answer choices or options or Equitable distribution of apatments.