Chapter 1 L Flashcards
Why are rent controls used?
cause housing is an essential commodity. RC is used to grey and help the poor. Gov thinks it redistributes income from rich to poor. RC helps in the short run.
How do rent controls work?
legislation that is enacted when a shortage exists. rent control is a price ceiling. freezes the price of rent units .
Problems with rent controls?
artificial low prices, much is in demand but noone wants to supply. gov basically removes profits of rental owners.
With no substantial profits, landlords use their property for other uses. reducing supply.
If landlord must rent out property, they let it deteriorate bc they don’t care. (too much demand).
What is the black market (in terms of rent controls)
units up on the market to rent for higher than the controlled price. typically overcharges tenants.
Key money is?
demanding a additional charge from tenants to get the keys.
Who are the winners?
those who had apartments before rent controls enacted.
How could one fix the rent price problem?
with vouchers. basically are $ used to spend on housing. Amt of vouchers received depends on a income or means test
Vouchers are cheaper and More effective in the long run
