Existing Tenants Central Housing Group

Rent Controls May Help Existing Tenants But Will Punish Future Renters

A blog from a right wing think tank states that although rent controls if introduced will considerably help existing tenants but warns that not only would it badly impact landlords, it will cause significant problems for future tenants as rental housing stock levels will decrease significantly and the quality of properties will also fall drastically.

The blog by Gary M Galles states that the rent controls’ debate only considers how it will affect existing tenants but fails to take into account the effect on future renters.

Galles writes: “It would provide a massive windfall for current tenants at the expense of landlords, forcing or keeping rents far below market value, with tenancy protections guaranteeing the windfall into the future … But it would harm the far larger group of people who seek rental housing after rent control is imposed. The slowed growth or shrinkage in the quantity and quality of the housing stock over time that results will increasingly lead to ‘no vacancy’ signs rather than available or affordable units.”

The article was originally written for a US journal which refers to the ‘Bronowski Test’, the scientific theory from a Polish-British mathematician Jacob Bronowski for studying and analysing how policies will affect current and future users.

The blog continues: “Rental housing subsidies similarly violate the Bronowski test. Funding is never sufficient to aid all those eligible for subsidies. Those who do receive aid benefit.

“But the subsidies also increase the market demand in that sector of the rental market, which increases the market rents all others must pay. Again, looking only at the lucky disguises harm to the unlucky from the same group.”

Blog Post from PIMS

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