Many student government candidates at colleges and universities propose rent controls on local rental housing as a way to help students afford rental housing. Economic theory suggests that this policy would harm students as a whole despite the fact that some students who are able to find housing at the reduced price would benefit. Which of the following are some of the offsetting secondary effects of the rent controls that would work to the disadvantage of students?

Question

Quizplus · Accepted Answer

Rent controls create an imbalance in the rental market by setting a price ceiling below the market price. This leads to a shortage of rental housing as landlords are unable to cover their costs and lose incentives to maintain and improve their properties. The shortage results in increased discrimination where landlords can choose their tenants and higher security deposits for those lucky enough to find housing. Additionally, the reduction in quality and future supply of rental housing stems from the decreased incentive for landlords to invest in or build new rental properties. All of these negative secondary effects create a disadvantage for students in finding affordable and adequate rental housing options.

Many Student Government Candidates at Colleges and Universities Propose Rent