Rent Control Is a Great Destroyer

The Democrats’ proposal would wreak havoc. For proof, look at Argentina

By Amber Gunn. She is a senior policy analyst for the Mountain States Policy Center. Excerpts:

Argentina had "a rent-control law the National Congress had passed in 2020."

"the statute locked landlords into tenant-controlled leases for a minimum of three years and capped rent. The consequences were swift and brutal: 45% of landlords reportedly elected to sell their properties. Many others either converted their units into Airbnb-type short-term rentals or increased rates prior to the law going into effect. As the Cato Institute relates, the average rent for a two-bedroom apartment in Buenos Aires rose from nearly 18,000 pesos a month at the end of 2019 to 334,000 pesos four years later, well beyond the 210,000 pesos a month if the rate had tracked inflation. Since the law’s repeal, supply has reportedly rebounded and prices have fallen by double digits."

"Nearly a century of case studies by economists such as Friedrich Hayek, Milton Friedman and George Stigler have exposed rent control as destructive. Center-left economists have agreed. Jason Furman, who led President Obama’s Council of Economic Advisers, has said it “has been about as disgraced as any economic policy in the tool kit.”"

"Secured tenants in rent-controlled environments may not give up their units for decades, even after their needs have changed. Meanwhile, units fall into disrepair as landlords neglect basic maintenance or upgrades, because they can’t recoup investments through rent increases. Price-controlled units that can’t be converted into owner-occupied units are eventually abandoned, leading to blighted and dilapidated neighborhoods."

" As Friedman and Stigler observed, “Everything that is not as abundant as air or sunlight must, in a sense, be rationed.” If rationing isn’t done by price, it will be done by force in the form of central planning."

"the effect of pandemic-era eviction moratoria, under which many landlords went months or years without being able to evict nonpaying tenants. Once those restrictions were lifted, landlords raised prices to recoup costs, hedge against inflation and deter squatters."

"As Swedish economist Assar Lindbeck observed, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”"