Rent Ceiling

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.

BREAKING DOWN '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. Rent Regulation

    A law that limits the amount and frequency with which landlords ...
  2. Rent Control

    A price control that limits the amount a property owner can charge ...
  3. Price Ceiling

    The maximum price a seller is allowed to charge for a product ...
  4. Owners' Equivalent Rent - OER

    The amount of rent that could be paid to substitute a currently ...
  5. Ceiling

    The maximum level permissible in a financial transaction. Ceiling ...
  6. Economic Rent

    An excess payment made to or for a factor of production over ...
Related Articles
  1. Markets

    What's a Price Ceiling?

    A price ceiling is the maximum amount a seller can charge for a product or service.
  2. Personal Finance

    Do You Need A Rent Receipt?

    Landlords don't always bother to send receipts to renters. But there are important reasons renters should insist on getting proof they paid their rent.
  3. Markets

    What is Economic Rent?

    Economic rent typically occurs when a product, service or property is in short supply, but demand is high.
  4. Personal Finance

    3 Things to Consider When Renting By the Room

    Although renting by the room can increase returns on rental property, it does come with a few caveats.
  5. Personal Finance

    The Complete Guide To Becoming A Landlord: Introduction

    A landlord is a real estate owner who rents or leases land or a building to another party. Becoming a landlord can be a profitable venture because it can provide a steady income stream while ...
  6. Personal Finance

    The Complete Guide To Becoming A Landlord

    Being a landlord can be a fulfilling and financially rewarding experience. However, the decision to become a landlord should not be taken lightly.
  7. Personal Finance

    Top Tips For Successfully Renting Out Your Home

    Renting out your home can be a great way to ride out a real estate slump - if you do it right.
  8. Investing

    Can't Sell Your Home? Rent It

    Find out how to profit from your property when the housing market dips.
  9. Personal Finance

    The Complete Guide To Becoming A Landlord: Conclusion

    Being a landlord can be a fulfilling and financially rewarding experience. Because of the time and money involved in purchasing, maintaining and renting property, however, the decision to become ...
  10. Personal Finance

    Renting vs. Owning: Which is Better for You?

    Despite the conventional wisdom, renting might make more financial sense than you think.
RELATED FAQS
  1. Can unearned rent be considered deferred revenue?

    Learn whether unearned rent can be considered deferred revenue. Understand what accounting practices are used to account ... Read Answer >>
  2. For what sorts of purposes can the funds in a share premium account be disbursed?

    Discover various methods through which a business can work to reduce its deadweight loss while still following the letter ... Read Answer >>
  3. What is the difference between capitalization rate and rent?

    Find out the difference between capitalization rate and rent and why they are so important to making wise investments. Read Answer >>
  4. How do prepaid expenses affect liquidity ratio calculations?

    Understand how prepaid expenses affect a company's liquidity ratio calculations. Learn about the most common types of liquidity ... Read Answer >>
  5. What are the three "nets" of an NNN lease?

    Learn what the three "nets" are in an NNN lease and how they affect the responsibilities of both landlord and tenant in a ... Read Answer >>
  6. How are prepaid expenses recorded on an income statement?

    Understand how prepaid expenses are recorded on a company's financial statements. Learn why a prepaid expense would be considered ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center