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. Rental Pool

    A type of contract-law sharing arrangement. Rental-pool arrangements ...
  3. Rent To Own

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

    An economic scenario that occurs when there is an intervention ...
  5. Welfare Capitalism

    Definition of welfare capitalism.
  6. Housing Choice Voucher Program

    The Housing Choice Voucher Program helps families with very low ...
RELATED FAQS
  1. What are some common features of a mixed economic system?

    A mixed economy is defined by the co-existence of a public and private sector. The specific mix between public and private ... Read Full Answer >>
  2. How does the Affordable Care Act affect moral hazard in the health insurance industry?

    To see how the Patient Protection and Affordable Care Act, or "Obamacare," affects moral hazard in the health insurance industry, ... Read Full Answer >>
  3. How can I calculate the leverage ratio using tier 1 capital?

    The tier 1 leverage ratio is used to determine the capital adequacy of a bank or a holding company, and it places constraints ... Read Full Answer >>
  4. How was Glass-Steagall weakened prior to its repeal?

    The Banking Act of 1933, popularly referred to as Glass-Steagall, was signed into law by Congress in the early years of the ... Read Full Answer >>
  5. How is free enterprise affected by monetary policy?

    Monetary policy is concerned with the quality, quantity and function of money instruments in an economy. Perhaps the best ... Read Full Answer >>
  6. In what types of economies are regressive taxes common?

    Regressive taxation systems are more likely to be found in developing countries or emerging market economies than in the ... Read Full Answer >>
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. Retirement

    Retiring Abroad: Should I Sell My Home?

    You've decided to retire in another country. What should you do with your home in the United States?
  7. Options & Futures

    Get To Know These Crucial US Options Market Regulations

    How are options regulated in the U.S and which organizations are involved in options market regulations?
  8. Economics

    What's Expansionary Policy?

    Expansionary policy is a macroeconomics concept that focuses on expanding the economy to counteract cyclical downturns. Expansionary policy can be implemented in one of two ways, or a combination ...
  9. Economics

    The Impact Of Ending The US Embargo On Cuba

    Many argue that ending the US embargo on Cuba will not only make US consumers happy, but also help the US economy and bring more freedoms to Cuba.
  10. Savings

    How To Make Money With Airbnb: Risks & Rewards

    Airbnb lets you turn your home or spare room into extra cash. Here's how to make money and protect yourself from the risks.

You May Also Like

Hot Definitions
  1. Capital Stock

    The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents ...
  2. Unearned Revenue

    When an individual or company receives money for a service or product that has yet to be fulfilled. Unearned revenue can ...
  3. Trailing Twelve Months - TTM

    The timeframe of the past 12 months used for reporting financial figures. A company's trailing 12 months is a representation ...
  4. Subordinated Debt

    A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known ...
  5. International Financial Reporting Standards - IFRS

    A set of international accounting standards stating how particular types of transactions and other events should be reported ...
  6. Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment ...
Trading Center