Rent Control

[rhuarc29]

Been a lot of talk about rent control as the cost of living spirals out of control, and it got me wondering: why isn't rent control tied to the assessment value of the house? Rather than a quasi-arbitrary percentage chosen by a tribunal.

For instance, a property with an assessment value of $500K (which I've seen sell on the market lately for $800K+) would have a maximum allowed rent of 0.004 x $500,000 = $2,000/month. That's the total from all tenants, so it it's rented out to four tenants, we're talking $500 each max. not saying 0.4% is the proper multiplier, but I think it's in the ballpark.

That way, a landlord could only ever increase rent if they pay for a new assessment. Which comes with its own disincentive of having to pay more property taxes. On the flip side, the landlord isn't prone to getting screwed either as expenses shoot up 10% but they're only able to raise rent 1.2%.

Seems a more elegant and self-sustaining system than what we currently have.

 

[Varoufakis]

Rent control = inefficiency… that’s 101 economics.

 

[Darts]

Rent control = inefficiency… that’s 101 economics.

The lefties love it.

 

[poker]

Rent regulation in England and Wales - Wikipedia

en.m.wikipedia.org

 

[poker]

Rent control = inefficiency… that’s 101 economics.

Explain how it’s inefficient please?

I was recently talking to a landlord that told me he tries to squeeze every available dime out of tenants. Seems it’s not enough they pay the mortgage, he expects them to pay for his lifestyle too.

 

[Mr Deeds]

Explain how it’s I efficient please?

I was recently talking to a landlord that told me he tries to squeeze every available dime out of tenants. Seems it’s not enough they pay the mortgage, he expects them to pay for his lifestyle too.

So he's not supposed to get a return on his investment?

 

[poker]

So he's not supposed to get a return on his investment?

Is the house being paid for not a return? It is an asset.

And rising rents hurt all society. Residential bleeds over to commercial. Higher land and building costs for manufacturing, higher costs for warehouses, transportation. Higher costs for retailing. All get passed along to consumers. And the employees have higher costs for housing, and the higher costs of the stuff they buy too. Now they need higher wages. God forbid gov’t raise min wage, then we can blame inflation and rising prices on that. God forbid it be the real estate that has gone through the stratosphere .

 

[Darts]

Price/rent of anything should be determined by:
Supply and demand
Risk versus reward

For example think of SP fees. Should there be SP fee control?

 

[Platon]

Rent control = inefficiency… that’s 101 economics.

That's the problem right there. We should stop treating real estate as investment, at least one that generates high yields in short amounts of time. In a healthy, productive and efficient society you should be able to afford a place to live.

 

[Platon]

Price/rent of anything should be determined by:
Supply and demand
Risk versus reward

For example think of SP fees. Should there be SP fee control?

How about water? Imagine they pass laws which allow people to have control of water sources (like it is done is certain south american countries) and they are able to determine the price you pay (no regulation). I'm sure you'll change your supply/demand mindset quickly. There are things which are basic necessities, shelter/housing is a necessity. If you want to live in a stable society you want to make sure that your social contract ensures availability of housing. Otherwise the divide deepens and you start to see social unrest, nobody wants that. There is plenty of room in this country to ensure sufficient supply of housing, instead it's been turned into an asset class and marketed at international investment events. We are now at a point where a young person pursuing an engineering degree has very little chance of ever owning a place to live or renting a decent place for a long time without huge rent hikes.

 

[Darts]

Food is a basic necessity. Price control for food?

 

[glamphotographer]

Did you say rent Control?

 

[Platon]

Food is a basic necessity. Price control for food?

Sure, if a lot of people can't afford it. It will be done, one way or another if we get to that point. They did it for toilet paper, remember? Food banks perform some of that function already. There is nothing worse than a lot of hungry people, governments either become authoritarian or fall quickly in those conditions.

 

[Samranchoi]

Linking rents to property assessments, . Why? If you know anything about property assessments you would know why.

 

[oil&gas]

Policy of public housing to provide rental accommodation
has been proven to be successful in postwar UK, Singapore
and Hong Kong (1960's to 1980's). Such policy would not have
worked in North America. People want to own their own residence
here.

 

[poker]

Food is a basic necessity. Price control for food?

What happens when food, water and housing become inaccessible except for the wealthy…. That’s when cities burn. And that is the end flaw in Capitalism the way it’s played today. It’s like a game of Monopoly, eventually most people lose.

 

[poker]

Policy of public housing to provide rental accommodation
has been proven to be successful in postwar UK, Singapore
and Hong Kong (1960's to 1980's). Such policy would not have
worked in North America. People want to own their own residence
here.

At one point in American history, it was the goal of gov’t to help citizens own homes. Freddy Mac and Fanny May were (and are) gov’t mortgage programs.

Ah, gov’t for the people.

 

[Varoufakis]

Wow...
Obviously, many people feel that they are experts on something when they have not read an introductory 101 text...
Do yourself a favor, grab any economics 101 books, and read, please.

If you seriously would like to understand how price control is inefficient read the stuff in the link below:

2023 CFA Level I Exam: Learning Outcome Statements

2023 CFA Level I Exam Preparation with AnalystNotes: Learning Outcome Statements

analystnotes.com

Actually, it should be mandatory to have any aspiring politician, whether municipal, provincial, or federal attend an economics class and pass an exam before considering his name on the ballot.
You get a driver's license to drive.
You should understand economics before thinking of policies that affect your constituents.

 

[Platon]

Wow...
Obviously, many people feel that they are experts on something when they have not read an introductory 101 text...
Do yourself a favor, grab any economics 101 books, and read, please.
...
You should understand economics before thinking of policies that affect your constituents.

I'm sorry, I missed the "experts only" tag in the thread's headline. Everything they have in those books is theoretical and usually limited in its application by a set of constraints, you should know this since you read one of those econ 101 textbooks. What we have happening in this country is real and it is a result of precisely those types of policies they talk about in those books. Why? Because they forgot that it's not just about supply/demand and that there need to be constraints on the market for it to function properly (theory meets reality). In other words you can't open up residential housing to people who don't even live here and view it as a speculative asset, you can't expect corporations to consider social policies your gov. is implementing while they scoop up all single family dwellings they can because it makes their quarterly reports look good, you can't expect people to remain calm when that's happening and not wipe out their HELOCs overleveraging themselves as they try to buy whatever they can. Remove foreign and corporate investment into residential housing (not just for two years but permanently) and you'll have a well functioning supply/demand driven market and there will be no need for rent control.

 

[barnacler]

Policy of public housing to provide rental accommodation
has been proven to be successful in postwar UK, Singapore
and Hong Kong (1960's to 1980's). Such policy would not have
worked in North America. People want to own their own residence
here.

In Singapore a huge percentage of the population own their own home, one of the highest in the world. The purpose of policy in Singapore is ownership, not rental.