Question

What are the pros and cons of rent control? Should it be abolished? Defend your answer in an essay and use a graph.

Answer 1

Ans

Pros

It protects poor sections of socirty

It reduces cost of travel as people can rent homes near their workplace. Thus it also reduces traffic congestion

Tenants would get all properties booked and timely rental payments

It also semetines saves from eviction if eviction reason is not genuine because such laws are embedded in rent control sometimes

Cons

Supply of housing for rent falls as rent falls. In longterm this may be sufficient reasons to actually increase rent

Quality of rented buildings fall as landlords spent less on maintenance.

It akso decreases property tax revenues

There are costs of administrating rent control

Even those having decent standard of living may be beneficiaries

I don't support rent regulation because it ultimately results in shortage of housing. In fig 1 S is supply of housing and D demand. Now equilbrium rent is R. However Govt fixes rent at Ro aas can be seen in figure at Ro demand us greater than supply. This means there us shortage of housing. Not only that since prices are low landlords have less incentive to invest in longrun. Thus tenants may have to pay more in longrun. Hence I am opposed to this system