Rent Control Policy On Student Accommodation

Rent control is an important type of government regulation of housing markets during which a set price is placed that limits the amount a property owner can charge to rent out a home, apartment, or other real estate. This usually leads to several implications for allocation, welfare, and investments in housing. (Skak & Bloze, 2013). A rent control is usually imposed to make housing more affordable by setting a price below the free market equilibrium. The free market allocates resources through the price mechanism; when prices rise this acts as a signal to producers to increase their output to gain higher profits. Similarly, when there is scarcity of a product, prices rise to deter some people from purchasing the product. In a market such as

Firstly, an important factor to consider would be how long the policy is implemented for; as highlighted earlier it is clear than in the long term this rent control policy will drive some landlords out of the market reducing the overall supply of student rented accommodation. However, this is not the only implication; ‘A ceiling on rents reduces the quantity and quality of housing available’. (Micheli & Schmidt, 2015), those landlords who remain in the market have no incentive to upkeep the quality of these buildings and thus over time will allow the quality of student accommodation in Nottingham to decline. This would be an allocatively inefficient outcome as there are fewer properties on the market and the quality of accommodation is getting worse thus leading to fewer people’s needs and wants to be met at the current market price. The fact that this rent control policy will create long waiting lists may lead to it contradicting its original purpose, students who are limited for choice may have to opt for black market prices even if it is above the free market equilibrium; this will therefore raise the question as to who this policy will directly be benefiting. A key point to mention that although rent control may provide those who are priced out of the market a better chance of securing accommodation, it does not fix the fundamental problem of there being a shortage of student rented accommodation. Overall, although it can be argued that rent control provides opportunities for housing to be more affordable, it is evident that should the Nottingham City Council impose rent control on all accommodations rented by students, it would lead to an economically adverse