Can Rent Control Cause Shortages?

As in the case of other price ceilings, rent control causes shortages, diminution in the quality of the product, and queues. But rent control differs from other such schemes. ... With rent control, because the law places sitting tenants first in the queue, many of them benefit.

Do rent controls create housing shortages?

This topic deals with shortages, considering as an example the role of rent controls in creating housing shortages. ... These increases in market rents can create hardships (that is, have significant real income effects) for those who spend substantial fractions of their incomes on housing.

Why does rent control cause a shortage of places to rent?

Two reasons—rising demand and tight supply. ... In the short-term, rent controls put the rent growth rate of “controlled” units below the market-determined growth rate, which leads to excess demand at the lower rents. Given a fixed supply of units in the short-term, this leads to a small shortage of units.