Sweden's Rent Control Disaster

• A Toronto-based public policy analyst studied Sweden's rent control disaster where tenants wait as long as 14 years for an apartment.
   

• "Stockholm has some of the most rigid rent controls on earth. While long-term residents enjoy low rents, young Swedes often wait more than a decade for an apartment."
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• Assar Lindbeck, Stockholm University economics professor famously noted: “In many cases, rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.” 

New York Rent Controls Hurt Low-Income Folks

• "The late screenwriter Nora Ephron once noted with some satisfaction that she moved into a five-bedroom apartment on the Upper West Side in 1980 and stayed there for 24 years, paying one-third the true market rent. The vast majority of new residential construction in New York is geared to the wealthy who can pay rents above the controlled limit or who are willing to buy their apartments outright as condos or co-ops.
   

• In sum, rent control hurts the people it’s supposed to help." 
  
  -Nicole Gelinas, a senior fellow at the Manhattan Institute for Prager University

CMHC global study
of rent control 

• "At CMHC, we undertook a broad review of the literature on the impact of rent control.
   

• The conclusion of dozens of papers around the world is that there are significant costs to rent controls, including:
  
  -reduced housing quality
  -decreased supply
  -poor maintenance
  -more benefits to higher income than to lower income households."

Ontario Rent Controls

• Historical Ontario chart for notes impacts of rent controls versus new apartment building, taken from Modern Principles of Economics. 

New York City Rent Control

• Nobel Prize economist Paul Krugman's famous NY Times OpEd:
   

• "The analysis of rent control is among the best-understood issues in all of economics, and -- among economists, anyway -- one of the least controversial.
   

• In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that "a ceiling on rents reduces the quality and quantity of housing. Sky-high rents on uncontrolled apartments, because desperate renters have nowhere to go -- and the absence of new apartment construction."

Landlord BC
Rent Control Study

• In BC, a 2019 Landlord BC study found "between the 50s and mid-70s, when there were no rent controls, we were building secure purpose-built rental housing to meet the demand of current renters and the steady flow of immigrants to our province."

Seattle vs. Vancouver

• Dr. Andrey Pavlov, a Real Estate Finance Professor at Simon Fraser University, studied why Seattle had more vacant rental apartments than Vancouver.
   

• He found that Vancouver, when demand for rental housing rises, new construction is often hindered by several factors:
  - Rent control limits on how much landlords can increase rents.
  - Rental-only zoning that decreases property value for new homes.
  - Long moratoriums preventing  demolition of old rental buildings past their useful life
  - Sales taxes that raised builder cost
  - A school tax on development land 
  - Lengthy approval processes that add costs passed onto renters.

San Franciso Rent Controls

• A recent study of rent controls in San Francisco by Stanford University  clearly found the harmful impacts on housing.  
   

• In recent years, “liberal” and “progressive” California voters  rejected the expansion of rent controls twice by a “resounding” majority. Both Propositions 21 and 10 to expand rent control in California failed by a large majority of voters (60%), many of whom are renters. The harms of rent control on tenants in San Francisco was a major reason. - LA Times

Rent Control Agreement

• A respected survey of economists on the left & right of the political spectrum agree rent controls harm housing. 
   

• Ninety-three per cent agreed rent controls impact the "quantity and quality of housing" available. 

CMHC says private sector rental funds critical

• “Private sector investment in rental construction is critical,” said the CMHC report Accelerating Rental Supply. “Governments do not have the resources to meet overwhelming demand.”
   

• “Over a ... decade across all Canada the federal government invested about $43 billion,” said Rental Supply. “Compare that with the value of condominiums held only by small investors in Toronto alone, estimated by Statistics Canada to be worth roughly $40 billion in 2021. The contrast is stark. The scale of private investment is vastly greater than that of government.”
   

• “Sweden has tight rent controls and long wait lists for rental apartments while Tokyo has limited rent control, strong tenant protection and plentiful rental supply."

Rent Control Ruin

Toronto Metropolitan University

•  "Many housing advocates champion rent controls as a panacea for rising rents, but a wealth of empirical evidence indicates that while such controls may offer temporary respite to current tenants of controlled units, they invariably inflict long-term damage on future renters.​​ 
   

• This is because landlords grappling with rents that don’t cover improvement costs often neglect maintenance, leading to a decline in housing quality.... a real-life consequence. Rent controls discourage new construction by dampening investor enthusiasm since they fear future revenue limitations." 
  - Dr. Murtaza Haidar, professor of Data Science & Real Estate Management, Toronto Metropolitan University.

Rent Control Vienna

• A study of mostly German language sources found the "Austrian city’s reality is starkly different from its portrayals in the English-language press. Vienna’s social housing is expensive, unfair, and increasingly unsustainable. Newcomers must pay massive upfront costs.
   

• Moving into a typical 750-square-foot cooperative apartment requires an entry fee of about $38,000. Viennese renters must also cover costly utilities, repairs, and maintenance, including essentials like heating."
   

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RBC Economist Says:

• Robert Hogue, assistant chief economist with Royal Bank, said he believes rental regimes are factoring into investor decisions to buy today.
   

• “Look at developers of new condos, they have almost zero sales this year, and this is largely because condo investors are not there, and they are not there because the equation doesn’t work from a capital appreciation or a rent perspective,” said Hogue.
   

• It’s one thing to say rents are too high relative to income across the country, but every piece of legislation and every impediment that makes it more difficult to get a competitive return on your investment, like rent control rules, drives investors out of the market.
   

• Proponents of rent control can argue, “Great, we don’t want investors owning housing.” But where does your supply come from in the future? Be careful what you wish for because you might end up with a worse housing crisis."

Legal View

• Legal expert fears affordable housing stock will disappear due to government overregulation and tenant protection measures that have swung too far to one side.​​​

Rent Freeze Folly

• A real estate professor at Columbia Business School advises in the Financial Times 
  that tighter rent control in New York City may "soothe frustration in the short term, but in practice it exacerbates the very problem it is meant to solve — housing affordability." He argues many landlords can't break even anymore with a quarter of "rent controlled" apartments now in mortgage delinquency.
   

• Relaxing some of the strict rent controls to allow owners to add repair costs into rents would take some of the pressure off and encourage new building.
   

• He also takes aim at those who dismiss new housing as "luxury apartments", arguing every unit helps. Economists call this "filtering", he notes.  As those with higher incomes move into new  buildings this frees up older units that are more affordable.

Landlords Win Rent

Control Ban Retention

• The push by tenants in Massachusetts to overturn the country’s three-decade rent control ban has ended.

• The Supreme Judicial Court on Tuesday struck down a ballot measure that would have let voters choose to bring in statewide rent control in November. 

• Their push thrust Massachusetts to the forefront of a national argument over whether such controls can restrain housing costs or backfire by slowing development.

Rent Control: Study History

• "Rent control is a subset of price controls. While its supposed goal is sympathetic—the desire to make housing affordable—it fails for a simple reason: it prevents prices from doing the job they exist to do.

• Prices are signals. They convey information about scarcity, preferences, and trade-offs. A rising rent is not merely a burden on tenants. It also sends a message to everyone involved in the housing market. To builders, it says, “Build more—devote more land, labor, and capital to housing.” To tenants and prospective tenants, it says, “Housing is becoming scarce—adjust, economize, take in more roommates, move to a smaller apartment, or consider alternative locations.”

• When rents are capped artificially below equilibrium:

• Landlords want to supply fewer units at the controlled price.

• Tenants want to rent more units at that price.

• The gap between quantity demanded and quantity supplied becomes a shortage."

Rent Controls Don't Work

• From the New York Times editorial board: "Unfortunately, the anger over high housing prices has also raised the possibility that Massachusetts voters will approve a different ballot proposal this fall that would be counterproductive: statewide rent control.
   

• It might sound like a solution, but it would discourage construction and renovations. Artificially low rents make it harder for developers to recoup the costs of building.
   

• Rent control has not solved the housing problems in New York City, and it will not solve them in Massachusetts. The national pattern is clear. The way to bring down housing costs is to increase housing supply. The initiative to create a statewide lot-size minimum would help accomplish this."

Landlord BC studies

• "One of the most comprehensive reviews of rent control research available today is economist Dr. Konstantin Kholodilin’s review of the global empirical literature, published in the Journal of Housing Economics.
  
  The “meta” study (the only one of its kind) synthesizes decades of empirical research and examines the effects of rent regulation across a wide range of jurisdictions and market conditions.
  
  Its findings are nuanced – rent controls can provide benefits to incumbent tenants in the short term, but the broader body of evidence consistently identifies significant trade-offs, including reduced rental supply, lower housing mobility, reduced investment, and deterioration in housing quality over time."

The Economist

• And renters are not the only people to suffer. A well-oiled rental market helps economic growth by offering flexible tenancies so that people—and especially young workers—can move easily to new jobs. Clogging it up hurts economic growth.
   

• Build back better: Fortunately, some governments are realising that they have erred. Ireland is reconsidering its rent controls, for example. But the only way to end foolish regulation is to build enough homes that nobody sees it as necessary. In Texas building rules are loose and housing is mostly abundant; landlords face few constraints and few call for them. Liberal construction policies beget liberal rental markets, to everyone’s benefit."