What’s Wrong With Renting Sheds to Poor?: Housing policies create the problem

Commentary, Housing Affordability, Joseph Quesnel, Poverty, Uncategorized

A St. Boniface man has been fined for renting out two sheds in his backyard for some people to live in.

Charles Warman pleaded guilty to three charges under the Public Health Act. Public health authorities were notified after some neighbours made some calls.

Now I have not witnessed these sheds, but apparently they are quite small, have no windows, and lack indoor plumbing. Thankfully, the sheds had plug-in heaters.

The neighbours should not be castigated for their concerns about the living conditions of others. But if someone were to understand what they were getting into, who are the authorities to try to prevent these kinds of consensual arrangements between adults?

Apparently, the tenant involved was a friend made homeless after a bug infestation in his apartment unit. I don’t know the whole situation and all the factors, but for him, this was a good deal.

ARTIFICIAL SHORTAGES

Beyond the conditions, public health authorities and the province should realize these measures are symptomatic of a wider problem in Winnipeg and all cities that impose rent control. Rent control policies create artificial shortages in the housing market, period.

Never mind affordable housing. Rent controls are governmental regulations that limit landlords’ ability to freely set and increase rents on residential properties. These controls often coincide with other regulations concerning the landlords’ responsibilities and the tenants’ rights in a rental arrangement.

While many inaccurately try to blame the problem on “greedy landlords” turning apartment units into condominiums, it is the fault of policies that make it unprofitable to get into this business at all. Economists have demonstrated rent control leads to housing deterioration, fewer repairs and less general maintenance. It’s not greed; it’s less money overall for these things when you limit the rate of return to landlords and raise their costs.

For those who criticize landlords on their soapbox, I wonder if they would be willing to go into the rental housing market and build housing units at these rates?

If there is one thing most economists agree on, it is that rent control reduces the supply of housing. Research done by professor Hugh Grant at the University of Winnipeg, as well as researchers at the University of Calgary’s School of Public Policy, confirmed this simple fact.

More disturbingly, they found cities with rent control actually have higher rents. For example, rents were actually higher in rent-controlled Winnipeg than rent control-free cities like Regina.

The reality is informal arrangements spring up when the government-regulated system fails landlords and tenants and the market is not allowed to operate properly. Informal economies always emerge in these situations. The problem is the informal economy escapes even the most reasonable government regulations for health and safety.

Demand for housing will always exist and someone will supply it for someone else. We should not punish people for doing this for others. But if we want to try to curb some of the worst kinds of arrangements that others may find shocking, we should start to wonder why people are entering into them and how government policies create these situations.