SHOCKER: Rent Control Doesn’t Work
Andreas Kluth has a great piece over at Bloomberg that looks at the latest data from Berlin after the city tried a rent control program over a year ago.
So what did they do? Kluth explains, “For all apartments built before 2014, rents were frozen at whatever they were on Jun. 18, 2019.”
What happened? In the regulated markets prices dropped relative to those in the 13 other cities. Meanwhile in the unregulated markets, apartments outpaced those in the other cities.
Kluth’s conclusion nails it on the head, “These data confirm what economists had warned about — and what’s been observed in other cities that dabbled in rent controls, such as San Francisco or Cambridge, Massachusetts. The caps represent a windfall to one group of tenants: those, whether rich or poor, who are already ensconced in regulated apartments. Simultaneously, they hurt all other groups — especially young people and those coming from other cities — by all but shutting them out of the market.”