Rent Control

AAA

DEFINITION of 'Rent Control'

A price control that limits the amount a property owner can charge for renting out a home, apartment or other real estate. Rent control acts as a price ceiling by  preventing rents either from being charged above a certain level or from increasing at a rate higher than a predetermined percentage. 

INVESTOPEDIA EXPLAINS 'Rent Control'

The purpose of rent control regulations is to limit how much money individuals and businesses must spend on renting real property. The amount of rent permitted may vary across jurisdictions and property types, but is generally set at a level considered affordable to renters and fair to property owners.

The economic impact of rent control regulations has been disputed. Some economists consider rent controls, like other price ceilings, to be market distortions that discourage the construction of more homes by limiting the profits owners can earn from them. By discouraging the construction of new housing stock, regulators may create the same housing shortage they sought to prevent by enacting the legislation in the first place. Others believe rent control is a viable method of ensuring affordable housing for renters that prevents landlords from capriciously raising prices. 

Rent regulation schemes may permit property owners to increase rents at a fixed rate, or at a rate indexed to economic factors. Rent levels indexed to inflation, for example, allow owners to increase the rent they charge tenants based upon the rate of inflation or the rate of inflation plus a percentage.

RELATED TERMS
  1. Price Ceiling

    The maximum price a seller is allowed to charge for a product ...
  2. Rent To Own

    An arrangement between a consumer and a seller that allows the ...
  3. Market Distortion

    An economic scenario that occurs when there is an intervention ...
  4. Rental Pool

    A type of contract-law sharing arrangement. Rental-pool arrangements ...
  5. Welfare Capitalism

    Definition of welfare capitalism.
  6. Housing Choice Voucher Program

    The Housing Choice Voucher Program helps families with very low ...
Related Articles
  1. Personal Finance

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

    Your lifestyle, level of commitment and the trade-offs need to be carefully weighed.
  2. Home & Auto

    Reasons Renting Is Better Than Buying

    Owning a home is much more expensive than renting. Here are the places where the costs differ greatly.
  3. Home & Auto

    5 Rental Red Flags

    Pay attention to the small things when rental shopping.
  4. Home & Auto

    Is Now The Time To Buy Or Rent?

    While you can snag serious deals in this current economy, it doesn’t mean that buying a home is the best choice for you right now.
  5. Personal Finance

    6 Tips For Renting An Apartment

    Find out what you can do to find a fabulous apartment to fit your budget.
  6. Economics

    What are the major differences between a monopoly and an oligopoly?

    The major differences between a monopoly and an oligopoly include the number of firms in the market, type of barriers to entry and presence of close substitutes.
  7. Invisible hand is a reference to a famous metaphor used by economist and philosopher Adam Smith.
    Economics

    What does "Invisible Hand" Mean?

    Invisible hand is a reference to a famous metaphor used by economist and philosopher Adam Smith in his classic 1776 book entitled “An Inquiry into the Nature and Causes of the Wealth of Nations.”
  8. Free enterprise is the economic term used to describe an economy with very little government ownership.
    Economics

    What's Free Enterprise?

    Free enterprise is the economic term used to describe an economy with very little government ownership or regulation. In a free enterprise system, competition and the preferences and choices ...
  9. Economics

    How Bitcoin Is Helping Ordinary People Overcome Currency Control In Their Country

    Bitcoin has proven to be a useful alternative as a means to bypass unreasonable and arbitrary government controls over free exchange conversions.
  10. Economics

    Where is Bitcoin Regulated?

    Bitcoin is still so new that countries are struggling to make legislation catch up with technology. Some nations are more open to virtual currency than others.

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center