Rent Ceiling

AAA

DEFINITION of 'Rent Ceiling'

A maximum price a landlord is allowed to charge for rent. Rent ceilings are usually set by law and limit how high the rent can go in a specified area. However, as a result of this regulation, the quantity of available housing is often decreased because landlords are not willing to rent out their property for a low price.

INVESTOPEDIA EXPLAINS 'Rent Ceiling'

Many economists question the effectiveness of rent ceilings. They have no effect if the equilibrium price is below the ceiling. If the ceiling is set below the equilibrium level, however, then there is a deadweight loss created. Other problems come in the form of black markets, search time and fees which are not exactly rent such as "key money" (large initial cost for new keys).

RELATED TERMS
  1. Law Of Supply

    A microeconomic law stating that, all other factors being equal, ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being ...
  3. Quantity Supplied

    A term used in economics to describe the amount of goods or services ...
  4. Ceiling

    The maximum level permissible in a financial transaction. Ceiling ...
  5. Floor

    The lowest acceptable limit as restricted by controlling parties. ...
  6. Deadweight Loss

    The costs to society created by market inefficiency. Mainly used ...
Related Articles
  1. To Rent Or Buy? There's More To It Than ...
    Personal Finance

    To Rent Or Buy? There's More To It Than ...

  2. Support And Resistance Basics
    Active Trading Fundamentals

    Support And Resistance Basics

  3. Tax Deductions For Rental Property Owners
    Taxes

    Tax Deductions For Rental Property Owners

  4. Sell Your Rental Property For A Profit
    Taxes

    Sell Your Rental Property For A Profit

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center