Advantages And Disadvantages Of Rent Control

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The following essay is based on the topic of rent control as a long-term policy to address the shortage of affordable accommodation in Cape Town. In the Weekend Argus article, Silber’s main issue is the shortage of affordable housing and he suggests two solutions which might solve this: A zoning scheme or the reintroduction of rent controls. This essay is going to look at the equity and efficiency of a rent control policy as well as the short-term and long-term advantages and disadvantages of rent control and how each of the various stakeholder groups might be affected.Firstly, rent control is a “law of the maximum price that landlords can charge tenants.” (Block :2006). As can be seen on the graph in figure 1, without a rent control policy the market price of rent is equal to P0 and the number of apartments is equal to Q0 and as soon as rent control is…show more content…
Many areas around Cape Town are usually segregated by household income, with the upper middle to higher income earners usually living in better neighbourhoods in better parts of the city than poor to lower middle income earners and because of the effects of the apartheid the upper-class earners are predominantly white while the lower class are mostly black Africans so with the introduction of rent controls this might allow for a portion of the lower class to be able to afford to live in the neighbourhoods where most of the upper class might reside. On the other hand, the control could affect the property tax revenue. By imposing a rent control policy, it might decrease the property tax revenue, which is calculated based on a property’s value. Seeing that rent controls might decrease the value of property, this could lead to a decrease in the property value which in turn could affect the communities that might be dependent on the property tax revenue. The government can intervene in the following

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