Question

If you were the government, why would you not want to legislate “rent controls” for more than a few months (as some places have done during COVID-19? How does this differ from long-term “rent-contros” legislated in the UK and Ontario (1870’s)?

Answer 1

Rent control are essential and have positive impact in short run when economies are facing some sort of crisis. In the midst of Covid-19 pandemic, several countries adopted short term rent control mechanism. Economists are of the view the long term rent control decrease affordability and creates some sort negetive spilovers on surroundings.

The long term rent control adopted by Ontario and U.K implies the intervention of government in the private relationship between tenants and landlords. The main rationale behind the rent control was cost of renting has been steadily increasing , but the inability of wage to keep up. The wide gap between rental cost and wages demanded the introduction of rent control. But sometimes the strict laws regarding the tent control affects the housing market and which in turn affects the construction and other related industries in the country.