Renting an apartment can be a cost-effective method for a young or middle-income person to live in or near a significant city and revel in a lifestyle which homeownership could never provide. However, rental rates have a tendency to rise over time as landlords find tenants willing to pay more or as the price of housing rises because of inflation.

Definition

Rent control is a program that a number of cities institute to set limits on how much landlords may increase rent on existing tenants. It is most frequent in cities with large populations where tenants may have trouble finding affordable housing. Most rent-control apps include exceptions and exemptions, therefore rent control doesn’t apply to all rental units in town. However, for all those tenants with rent-control flats, the financial protection can be essential for remaining in an apartment for a lengthy period of time.

Purpose

Rent control’s purpose is to make sure that a city has a certain amount of affordable housing for lower- and – middle-class residents. Without rent control rates would rise and fall based on supply and demand. Cities which are desirable areas to live could easily become overpriced for all but the wealthiest residents, causing issues with the labour market and creating large financial inequality.

Policies

Every city sets its own policies for rent control. Policies make it possible for landlords to increase rent. This may be a flat rate, as it is in New York City, or it may be tied to inflation, as is the situation in cities such as San Francisco. Landlords may petition for bigger increases due to unusual financial conditions, but for the large part tenants can expect to pay only slightly more in rent each year.

Benefits

The advantage of rent control happens for tenants. Aside from paying an affordable rent, they can predict what rent will price in the long run and budget accordingly without the fear of large or sudden increases that may make living in a apartment unaffordable. Rent control also has benefits for towns, allowing areas to keep economic and social diversity and enabling middle-class employees to live within the city instead of being pushed to low-cost suburbs or urban slums.

Drawbacks

Rent control also has some advantages. By encouraging tenants to stay in their flats longer it creates artificial scarcity. This can lessen the number of flats at any given time and drive up the price of accessible units. In addition, rent control creates an incentive for illegal leasing practices, including unauthorized subleases that tenants use to create a profit by renting their apartments to new tenants for more than they pay the landlord under rent control.

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