More than 100 studies point to downsides of rent control
Feverpitched via Getty Images
While rent control policies do slow rent growth in the buildings in which they are in effect, they also lead to a variety of unintentional negative effects, according to a new report published in the Journal of Housing Economics.
The report is based on a review of over 112 studies on rent control across the world, dating back to 1963. A majority of studies indicated that rent-controlled apartments experienced a drop in rent at an average of 9.4%, while rents for uncontrolled units rose an average of 4.8% following the start of rent control in properties nearby.
Researchers also found that rent-controlled units experienced a significant drop in overall conditions and upkeep. In the buildings where rent increases were controlled, revenue didn’t keep up with the cost of inflation and their value depreciated over time, the report said. This resulted in the buildings themselves deteriorating.
“Landlords are trying to preserve their yields by reducing their costs, including maintenance and service costs,” said Konstantin Kholodilin, the study’s author and senior researcher at DIW Berlin. “Over time, the rent-control units decay and their real value becomes proportional to the corresponding real rent revenues.”
Source: https://www.multifamilydive.com/news/rent-control-development-construction-survey/727682/
