At the world's oldest social housing, rent hasn't changed since 1521
In a world with ubiquitous housing, there is no need for social housing, because that which is ubiquitous (oxygen) is affordable.<p>In a world with scarcity, social housing protects the poor against unaffordability. That&#x27;s commendable. However, scarcity also means there is not enough for everyone.<p>Inevitably that means you get a group of poor winners (who obtain a social home) and a group of and poor losers (who remain on a waiting list for a social home).<p>Those on a waiting list are relegated to the non-social sector: paying market rates. The more social housing there is, the smaller the private housing market is, the higher the rent prices.<p>Thereby, the scarcer the situation is, the more unaffordable housing is, the bigger the calls for social housing, and the more the differences between winners &amp; losers is exacerbated.<p>That&#x27;s what we see develop in many cities . Some pay absolutely nothing, others pay way too much. The winners and losers group is often partially arbitrary. The benefits of rent-control are distributed unequally, some receiving rent-controlled benefits for decades, others remain on a waiting list for decades, while earning just as little. In many European cities waiting lists are &gt;10y, in Amsterdam for example it&#x27;s about 14y.<p>Second, the benefits of rent-control take away various healthy market-based incentives. My dad for example lives on welfare in an apartment with 3 bedrooms, by himself in the capital city, and pays 1&#x2F;3rd of the market rate. He has no incentive to seek out smaller housing which suits his needs just fine. Similarly, he does not make much use of the cultural offerings in the capital city that makes this place popular and expensive: theatre, bars, cinema, restaurants etc, he would be fine living in a smaller town without them. Yet, he has no incentive.<p>A market based rent for my dad would indeed make it unaffordable for him. At the same time, the market price is a way to allocate supply &amp; demand efficiently. My single retired dad has no demand for the size and location of his home, yet it is in extreme demand by others. The high market rate rent of say $2k a month, if applied, weeds out those who&#x27;re unwilling to pay the price of $2k worth of opportunity costs (high value for my dad) in return for 3 bedrooms in the capital city (low value for my dad, who&#x27;d decide to move in), and lets those who&#x27;s calculus is different (high value for young urban professionals) move in. Rent-control destroys that efficiency.<p>Second, it obviously puts a cap on prices and rental returns. Price elasticity of supply is at least somewhat elastic (more in the US than say, the Netherlands, but still). If industry X has fixed prices and industry Y doesn&#x27;t, ceteris paribus you&#x27;d expect most investments in production&#x2F;supply of industry Y because the returns aren&#x27;t capped. Rent-control in this sense can limit housing construction, exacerbating the problem further down the line. (This is less applicable to Europe which has more high-density built up areas that are more land-constrained than the US. As such, higher prices don&#x27;t always translate into more construction, which means the downsides of rent-control are smaller in this respect).<p>I&#x27;m a big fan of rent-control, but it has to be balanced with (partial) incentives. There seem to me some easy mechanisms that should be applied to bring more balance.<p>1) Rent-control is not enjoyed permanently, such as in many countries is the case. Instead, one gets 8 years of rent-control, after which you must move, or pay market rate. This brings balance to the current situation where one person has a rent-controlled apartment forever, and another is on a waiting list for 16 years. While de facto forced eviction after 8 years is obviously bad, it&#x27;s a lesser evil compared to the above distribution of scarce rent-controlled units.<p>2) If a rent-controlled unit has 3 bedrooms and you live there alone, you lose some of the rent discounts. It&#x27;s okay to live as you like, alone or with others. It&#x27;s not okay to live alone in a home that can house multiple people, and expect others (the government&#x2F;taxpayer or landlord) to subsidise you, while there&#x27;s people on waiting lists for decades. We actually have a lot of real estate, in almost all countries the number of people per home has been dropping for decades, while the average home size has been increasing for decades. Yet there is a scarcity of housing, in part because people occupy larger homes than they need. Particularly if the home is subsidised and rent-controlled, that shouldn&#x27;t be acceptable.<p>3) Rent-controlled rates should have market-based foundations. In the Netherlands for example, a rent-controlled unit in Amsterdam or a shrinking village of 500 people, is governed by the same maximum rental rates. Despite the fact that market rates might be 4-5x as high in Amsterdam. It&#x27;s important to subsidise the poor. It&#x27;s also important not to take away every single incentive, and create 1 price for a thousand different locations which are all in wildly different demand.  If homes in city A and B are priced similarly due to rent-control, but many want to live in A, those who&#x27;re indifferent to living in city A will occupy homes unnecessarily. If minor price differences are allowed and A is slightly more expensive than B, it&#x27;d incentivise those living in A who&#x27;re indifferent to A or B, to move to B due to the lower prices, freeing up in-demand homes in A. Rent-control is commendable but it should allow for some level of market rates, still.<p>Hope the post makes sense as some of it is written from an EU and even national&#x2F;city-level perspective that doesn&#x27;t apply everywhere in the same way.