Landlords And Economists Don’t Like Rent Control, But It’s Life-Changing For People Who Need It
Trevor Nichols is Huddle’s Halifax-based Associate Editor. We will be doing more commentaries like this when we move to our membership-based model on November 1. For more information or to sign up early, visit: https://huddle.today/help-huddle-grow-through-our-new-paid-membership-program/
Premier Tim Houston’s decision last week to extend the province’s rent control measures plopped the issue directly into the centre of the public conversation around Nova Scotia’s housing crisis.
Most experts don’t like policies that limit how much landlords can raise someone’s rent because economists generally don’t think they work — at least not in the long run.
But most people who aren’t economists love the idea of rent control. There’s a reason for that.
Landlords hold incredible power over their tenants and their decisions carry serious consequences for peoples’ lives — consequences as severe as whether someone loses their home.
It feels wrong for people with that much power not to be kept in check and, for many people, rent control feels like a great way to do that.
I think many of our leaders are too quick to dismiss that majority who want rent control because they assume they’re arguing from an emotional (and by extension, irrational) place.
Because our leaders have seen the studies and heard the economists argue why rent control doesn’t work. The good ones probably think they’re doing the right thing by axing it because it will benefit everyone in the long run.
They’re not crazy. The traditional economic arguments against rent control are both convincing and well supported.
Rental property owners forced into rent control often take their units off the rental market and sell them as condos, shrinking the number of rental units in a city.
One study in San Francisco found that rent-controlled buildings were significantly more likely to be converted into condos. That led to a 25 percentage point decline in the number of renters living in rent-controlled units.
And all those units leaving the market pushed the price of rent in the city higher.
Another Massachusetts study found rent control depressed the value of homes not just in the neighbourhood it covered, but nearby neighbourhoods that didn’t have rent control rules. In that case, rent control essentially acted as a kind of tax, with nearby homeowners subsidizing their neighbours’ artificially low rents.
Other studies have found that investment in new buildings, and repairs at existing buildings, both suffer when rent control is put into place.
RELATED: Why Rent Control Isn’t The Answer To Rising Housing Costs In N.S.
But there’s one very important thing these studies tend to gloss over: the actual people benefitting from rent control, and the enormous impact it can have on their lives.
Have you ever lived with the threat that you might lose your home? It looms over every aspect of your life. It’s like walking through an abandoned mine you know could collapse at any moment. It’s suffocating.
Rent control instantly removes that threat. Once it’s in place, you know no matter how bad the market gets, you’re safe. Unless you’ve been in that situation, you can’t possibly know how big a deal that is.
Giving people that peace of mind — that alone should outweigh any market distortion brought on by rent control policies.
But rent control’s benefits extend far beyond that peace of mind, anyway. People protected by it also have the luxury of staying in the same place, and by extension the same neighbourhood, for a long time.
They can build up a support system, wrap themselves in the security of a community. That’s particularly valuable for folks on a fixed or low income.
Staying put gives people a kind of “neighbourhood capital.” They’re near friends or family who can check in on them or give them a ride. Their kids can stay in the same school, grow up with the same friends. They can stay close to their job, or church.
There’s value in those networks. It’s a human value, one that might be a little more ephemeral, a little harder to plunk into an economic model, but it’s just as important. More important, really.
Because what’s the cost of depriving people of all of that?
Are our cities better off with a less regulated housing market, but a bunch of folks driven out of their communities living lonelier, more isolated, less secure lives?
Take away rent control and that will happen to more people. Whatever economic benefit putting them in that situation brings, it can’t possibly be worth it.
Huddle publishes commentaries from groups and individuals on important business issues facing the Maritimes. These commentaries do not necessarily reflect the opinion of Huddle. To submit a commentary for consideration, contact editor Mark Leger: [email protected].