Bernie Sanders Idea of National Rent Control Is More Idealistic Than Realistic
Democratic presidential candidate Bernie Sanders recently proposed one idea in his housing policy regarding "national rent control," but unfortunately the idea won't work, according to Business Insider.
Bernie Sanders proposed limiting annual rent increases in the U.S. to 3 percent or one and a half times the rate of inflation, whichever is higher. Many people in the United States struggle with rent payments, and Bernie may seem like a savior for proposing this idea, but it won't work.
Nationwide rent control has never been implemented, but various cities have explored the concept and the results are not pretty. Rent control does provide benefits for tenants who plan to reside there for the remainder of their lives, but for people who don't fit into that category, it's horrible.
One issue with Senator Sanders' proposal, is that rent control increase rent payment for everyone that does not currently reside in a rent-controlled apartment, basic supply and demand. A study of rent control in San Francisco revealed that rent-control laws lead to longer stays by tenants, which drives up the prices for other apartments.
Another issue is that rent control laws would not apply to new buildings so that it won't decrease the number of construction projects for new buildings. As a result, rent for the new buildings skyrockets due to the lack of free-market rentals that are subject to rent control.
The last issue worth mentioning is that landlords would be less inclined to invest in rent-controlled properties. A study of rent control in Cambridge, Massachusetts, showed that rent control reduces the value of buildings and surrounding neighborhoods. When rent-controlled buildings start to deteriorate, the value of nearby real estate decreases and fewer people searching for houses want to live there, which further decreases values.
Bernie Sanders recently proposed "national rent control" as a part of his housing policy, but the data show that the idea is more idealistic than realistic.