University of Regina Economist says Rent Control Policies Bad Idea

Frontier Centre, Housing Affordability, Saskatchewan, Uncategorized, Worth A Look (historic)

A Regina economist is cautioning that recent calls for rent control legislation is not the best way to deal with the availability of affordable rental units.

“The short answer — not really,” said Jason Childs, an associate professor of economics at the University of Regina. He explained rent control legislation can be divided into two types — those that set a cap on rent and those that control rent increases gradually.

Regardless of the type, Childs argues rent control legislation doesn’t help the people it is supposed to help. He said in places with rent controls, there is a tendency for tenants to hold onto low-rental units even if their economic situation improves. Childs cites actress Faye Dunaway as an example of someone who lived in a rent-controlled apartment in New York City for several years before finally vacating.

“If you’re already in an apartment, you’re golden. If you’re trying to find one, you’re out of luck,” he said. “The distribution of the effects of this policy is really, strongly negative for younger folks and new arrivals. So, we’re going to be protecting established residents at (their) expense.”

Childs also argues rent control legislation would negatively affect the quantity of rental units. Developers would be faced with a disincentive through the introduction of uncertainty in terms of demand and the ability to make a profit in the rental market.

This is combined with a quality problem with rent-controlled units.

“Basically, if you control the rate at which I can increase the rent … (and) if I’m not making money at this, I’m going to let maintenance slide,” he explained.

The issue of rent control arose earlier this week when a group of tenants living at 2221 Robinson St. spoke out about approaching monthly rent increases as high as 77 per cent on Sept. 1. Many have said they would rather move than pay the monthly rent increases — in some cases — from $675 to $1,195 for a two-bedroom apartment.

On Tuesday, the matter reached the floor of the Saskatchewan legislature during question period when NDP MLA David Forbes argued for rent control legislation in light of the Robinson Street situation.

However, Childs argues more social housing and subsidies to low-income renters are better ways to approach the issue.

In terms of the Robinson Street rent hikes, Childs admits 77 per cent is a huge monthly rent increase and that he has sympathy for the tenants, but also questions the fairness of tenants receiving a reduced rent when young people and new arrivals to the city are paying market value.

“This is less than a zero-sum policy,” he said. “Society as a whole loses.”