What is a potential consequence of rent control?

Rent control is a policy that limits the amount landlords can charge for renting out a property. While it aims to make housing more affordable for tenants, it can also lead to significant unintended consequences. One of the main consequences of rent control is the creation of a housing shortage.

When rents are kept artificially low through rent control, landlords may find it less profitable to maintain their properties or to invest in new rental housing. This can lead to a decrease in the overall supply of rental housing, as fewer landlords are willing to rent out their units or invest in new developments. Additionally, potential developers might be discouraged from building new rental properties due to the capped returns associated with rent-control policies.

As the demand for affordable housing remains high but the supply is constrained, a mismatch occurs, leading to a housing shortage where many individuals and families struggle to find available rental units. This phenomenon often drives up demand for any available units, and those who need housing most may find themselves unable to secure it—despite lower rent prices on controlled units.