How Rent Control Reduces the Quality of Housing

Zohran Mamdani made a campaign video in which he blames landlords for not maintaining their properties and providing basic amenities like hot water. Mamdani is also an advocate for rent control policies, but he doesn’t realize that the rent control policies that he supports are responsible for the decline in the quality of housing in the first place. Rent control reduces the supply of housing because it is no longer profitable to build housing at the price dictated by the government. Thomas Sowell writes that not only is there little new housing built in rent-controlled cities, but the quality of existing housing deteriorates “…as landlords provide less maintenance and repair under rent control, since the housing shortage makes it unnecessary for them to maintain the appearance of their premises in order to attract tenants.” (Sowell, 2015, p. 42). Henry Hazlitt states that if rents are not allowed to increase, “…landlords will not trouble to remodel apartments or make other improvements in them…Not only will they have no economic incentive to do so; they may not even have the funds” (Hazlitt, 1979, p. 129). Some rent control policies are so oppressive that landlords find it more profitable to abandon buildings altogether. Sowell writes that in New York City, “many buildings have been abandoned after their owners found it impossible to collect enough rent to cover the costs of services that they are required by law to provide, such as heat and hot water” (Sowell, 2015, p. 44).

Henry Hazlitt predicted that the inevitable result of rent control is the government deciding to build so-called “affordable housing” at the expense of the taxpayers. This doesn’t make housing affordable, but simply passes the costs onto those who do not have the luxury of living in rent-controlled housing. Hazlitt writes that “The houses are rented at a rate that does not pay back costs of construction and operation…the tenants in the buildings are being subsidized by the rest of the population…” (Hazlitt, 1979, p. 130). The question is how long will those who are forced to foot the bill for someone else’s rent choose to stay in the city and be looted by their public servants.

References

Hazlitt, Henry (1979). Economics in One Lesson: The Shortest & Surest Way to Understand Basic Economics. Three Rivers Press.

Sowell, Thomas (2015). Basic Economics: A Common Sense Guide to the Economy (5th ed.). Basic Books.