Why Rent Control Hurts Renters|5 Minute Video
Nicole Gelinas of the Manhattan Institute reveals why rate ceilings on apartments harm those it means to help– however also why rent control is here to remain. She describes the background of rent control in America (concentrating on New York in particular) and the negative result it has on prospective occupants and on the quality of rent-controlled apartment or condos. Did you know that property owners of rent regulated apartments in New York City rarely enhance their homes? Watch this video and find out why. Hint: They understand that there’s a long line of individuals prepared to move in if their present occupants get fed up. And despite the fact that proof suggests (and financial experts on the Left and Right concur) that lease control is self-destructive, the voters like it!
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Script:
There’s no hot button issue hotter than rent control. Second, those who benefit from rent control– and there are a lot of them– vote.
Imagine this six o’clock news story: a reporter interviews an elderly person describing how she’ll need to vacate her small apartment, her home for twenty five years, if her lease control isn’t preserved. What politician wishes to take on that?
These are just a few of the reasons why, when a city embraces rent control, it’s nearly impossible to remove it. Does lease control work? Does it lower or raise housing expenses? And does it increase the structure of more cost effective real estate? It may surprise you to know that nearly all financial experts– on the right and the left– from the late Milton Friedman to Paul Krugman agree that the response is no.
In a study of 464 financial experts in the May 1992 problem of American Economic Review, 93% said that “a ceiling on leas decreases the quantity and quality of housing readily available.” Why the unanimity? Since it’s an accepted financial concept that government enforced cost controls– which’s what lease control is– always leads to price distortions– in this case rents.This uses everywhere, however let’s concentrate on New York City, the location where I have actually focused my research.
New york city has the greatest rental market in the country. Of the city’s 8.2 million homeowners, 5 and a half million rent. And these 5 and a half million renters live in about 2.2 million apartment or condos or rented homes.
Every year, a city board votes on just how much owners of rent-regulated houses will be able to charge their renters for the following year’s one-year or two-year leases. The board members base their decisions not on supply and need however on an estimate of just how much costs such as fuel and insurance coverage have actually increased. And, obviously, how much of an increase voters will tolerate.
Consider what this suggests: the longer you remain in your home the more you benefit from below-market rents. Or to put it another method, why would you ever leave your lease managed house?
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Nicole Gelinas of the Manhattan Institute reveals why price ceilings on apartments harm those it intends to assist– but also why lease control is here to stay. She discusses the background of lease control in America (focusing on New York in specific) and the negative effect it has on prospective tenants and on the quality of rent-controlled homes. And even though proof suggests (and economic experts on the Left and Right concur) that rent control is self-destructive, the citizens enjoy it!
These are just a few of the factors why, when a city embraces rent control, it’s almost difficult to dislodge it. Because it’s an accepted financial concept that federal government enforced cost controls– and that’s what lease control is– always leads to price distortions– in this case rents.This uses all over, but let’s focus on New York City, the place where I have focused my research.
