| It impedes market forces that normally act to add more housing. In the case of SF, fortunately, we don’t apply rent control to new construction. But you can’t build new, bigger buildings if you can’t remove your tenants from the existing one. You also can’t afford to, since you’re not earning rent proportional to the actual economic value of your land. It reduces market forces that encourage optimal use of scarce resource. My neighbor in SF lives alone in his 3 bedroom apartment that he’s rented since 1990. If he paid market rate, all 3 bedrooms would be filled, 2 more people would be housed, and the overall housing demand would be proportionally cheaper. It massively restricts mobility of tenants. Once you’re in on a “good deal” you can’t move. And reduced turnover creates all kinds of inefficiencies: people live farther from their jobs, don’t upgrade into nicer units over time (and thus free the cheaper/older units for those who are starting out). It creates massive cost inequality for tenants and massive income inequality for landlords. As a tenant, one neighbor might be paying 50% or 100% or even 300% more than others with the same or similar unit, regardless of whether they can better afford it. A property might generate 1/3rd the income of the building next door simply because the owner has tenants that have lived there for 25 years. Meanwhile costs of gardening, roofing, carpentry, plumbing and other labor have increased and thus one building is in disrepair. The building can’t be sold without the tenants, so the building is worth much less than the neighbors is due to random chance. It places odd restrictions on lease terms, so that many go vacant unecessarily.
Because of rent control, if I own a unit built before 1979 I literally can’t make a contract with a tenant to lease to them for a year or two. Any term lengths I put on a lease are meaningless, and the tenant has nearly unlimited rights to live in my house for as long as they want. If I have plans to use a unit for something else, upgrade it, etc I will likely leave it unoccupied. |