Source: Konstantin A. Kholodilin, Journal of Housing Economics, 2024
A comprehensive review of 206 studies finds rent control consistently reduces housing supply and quality. Rent control leads to deferred maintenance, reduced mobility, and misallocation of housing resources.
Key Findings: The Impact of Rent Control on Housing Supply and Quality
Housing Supply Reduction:
○ Rent control policies consistently reduce the availability of rental housing. Landlords often convert rental units into owner-occupied homes or other uses to avoid regulations, shrinking the rental stock.
○ Studies highlight that supply constraints are compounded by reduced incentives to build new rental housing.
Deteriorating Housing Quality:
○ Rent control leads to deferred maintenance, as landlords face restricted revenues and rising operational costs. This results in aging and deteriorating housing stock.
○ Tenants in rent-controlled units often experience lower housing standards compared to tenants in market-rate housing.
Limited Market Mobility:
○ Rent control discourages tenants from moving, even when their housing needs change, resulting in inefficient allocation of housing.
○ This stagnation contributes to housing shortages for new renters and larger households in need of space.
Implications for Rent Control:
The findings confirm that rent control policies exacerbate housing shortages and quality declines, particularly in urban areas with already tight markets. Instead of improving affordability, rent control creates a ripple effect of reduced supply, declining housing conditions, and market distortions that harm both tenants and housing providers.