Answer to Question #152503 in Microeconomics for vienna

Question

what happens if rent controls are eliminated

Answer 1

Inclusion of rent controls upgrades housing stock and value appreciation. Expansion of rent control will force some landlords to recoup losses by redeveloping buildings; that is, by converting and upgrading their apartments. On the other hand, removal of rent controls will lead to tenant redistribution, which sparks welfare gains. There will overproduction of inefficient housing, forcing landlords to reduce their rents and profit margins to attract tenants.