alt Hacker NewsWhy would landlords not seek the highest possible rent without rent control?
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With rent control, you are limited in how you can increase rent later, so it’s to your benefit to let the apartment sit vacant longer until you get a desirable rent. Without rent control, because you can just increase rent next year by whatever, you can rent it at the market rate right away without waiting.
They would. But second order effects ensure that this very act leads to the decline of housing prices. These effects being eliminated by rent control makes it the premier anti-tenant policy.
The market is 2-sided. They can "seek" whatever they want but they are going to get the clearing price.
You might prefer to have the vacancy filled faster rather than waiting for the highest possible price. These algorithmic pricing cases kind of revolve around this concept. It is the value that the service provided the companies.
Landlord input a desired vacancy rate or time on Market, and service suggests the right price.
Under rent control the highest possible rent is set by laws. If you fall behind on the allowed rent increase you’re usually not allowed to catch up to market rate later, such as when your tenant leaves and you put the unit back on the market. So to avoid getting stuck at below market rate with no legal way to catch up, you have to take the maximum allowable rent increase every year. In some situations it’s better to leave a unit empty and wait for someone be willing to rent at the rate than it is to lower rent, because the consequences of lowering rent will stick with the unit for years.
Without rent control, rents can be kept constant, moved up, or moved down without having to consider the consequences for years to come. The ceiling is set by the market rate, but there isn’t a function driving all of the landlords to raise by the annually permissible maximum so they try to discover it instead.
Rent control is instituted in cities that have constrained housing supplies, so the demand is there. Landlords switch to raising rents in unison by the maximum allowable amount every year because that’s the only way to operate.