Tuesday, May 24, 2011

The other extreme: when rent controls go bad

Portugal's Towns Crumble as Century-Old Rent Controls Strangle Investment

A seven-storey office building in Lisbon’s business district generates just €1,100 a month in rent. The six tenants, including law firms and a hostel, have had their rents frozen for years or simply don’t pay any more because they don’t fear eviction. Most landlords are coping with contracts that never expire and rent-controlled rates that are frozen or limited to inflation adjustments. Even death isn’t enough to break a lease because tenants can pass on a contract to their children, spouses or parents. Some of these contracts date back to the 60s and pay as little as €5 per month for a four-bedroom apartment in the capital. The lack of incentives to invest in renovation has caused a chronic shortage of rental accommodation. That has forced people to buy property instead....

Posted by drewster @ 01:44 AM (1161 views)
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One thought on “The other extreme: when rent controls go bad

  • mark wadsworth says:

    Exactly.

    Hence and why I have never said it was a good idea to have rent controls. Sure, the government has to keep an eye out and do something if rents get “too high” (i.e. build more social housing, allow more private housing to be built) but directly interfering in price setting is a bad idea.

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