From bad to worse

I support His Worship the Mayor in most of his efforts, save for his ridiculous ideas to “solve” the “affordable” housing “problem”. But the man is a veritable Pericles when compared to the ingenious solutions dug up by the Saskatchewan NDP:

Saskatchewan NDP Leader Dwain Lingenfelter has pledged the party will implement rent controls if elected.

Lingenfelter said an NDP government would introduce changes to the Residential Tenancies Act to protect Saskatchewan families from unreasonable hikes in their monthly rent.

Lingenfelter said the high cost of housing and rent is a major issue that affects people throughout the province.

“Having heard the stories of families forced to choose between paying the monthly rent and buying winter boots and coats for their kids, we believe the time for action is now,” he said.

For once, I’d love to have creepy millionaire politicians actually name a person who has actually had to make the choice between paying rent and buying new coats or boots for their kids. Please, just give me one.

No doubt, there are those who merely scrape by and survive and sacrifice in times of economic booms. Being in that kind of position sucks, and I don’t wish that type of life on anyone. But these people aren’t served by pandering politicians who serve up well-worn cliches of the trials of the impoverished in our society. Life is far more complicated than having to make a figurative Sophie’s choice every month.

And even if this mythical poster boy for the poor actually did exist, he could be less served by this absolutely stupid proposal to limit rent increases by state-enforced fiat.

I’m not going into too much detail on why this is such a bad idea—this argument can be readily found all over the ether—but here‘s a cogent argument as I could find:

Rent control is not just a conventional price control, setting the price at which willing renters and landlords are permitted to do business.  It is a coercive act that gives landlords no legal option, but to rent to a tenant, even against his will and often at a financial loss.  Rent control adds a non-voluntary burden to landlords which deepens over time because landlords have no option, but to rent to a tenant at below market rates.

Not only does rent control cause huge distortions in the housing market, but the burdens fall disproportionately on the poor and underprivileged people it’s enactment was intended to benefit. Although particular people are able to live with the comfort of low rent payments, even those renters will see their living conditions deteriorate as landlords neglect repairs and maintenance. As the situation gets worse, middle class residents are able to move away, leaving behind the poorest residents who have become reliant on the reduced rent.

In effect, rent control grants property rights to renters that originally belonged to the original property owners, while retaining the owner’s obligations. Rent control becomes a redistribution of wealth to existing tenants and away from apartment owners, market-rate apartment renters, newcomers to an area, and renters who’s needs change over time. Nonetheless, over time the quality of life decreases for all residents of a city where rent control is imposed.  Essentially, if housing affordability is the objective, strapping additional burden upon providers of housing will only make matters worse.

In conclusion, controls on supply can do as much damage to affordability as controls on price. Eliminating rent control needs to go hand-in-hand with loosening exclusionary zoning and density restrictions in order to allow the market to perform as it should. A truly free-market incentivizes investment in quality affordable housing for all residents by allowing individual decisions to determine living patterns and location preferences based on quality, availability and affordability.

Just imagine what would happen if rent control was instituted at the same time municipal governments start backing loads for first-time home owners.

First, if prospective entry-level home buyers start flooding the already tight market for first-time owners.

Next, home builders are encouraged to build more homes for first-time home buyers and less homes for rental accommodations.

Similarly, rent controls will create a disincentive to build new rental accommodation.

Meanwhile, landlords will be encouraged to convert their apartments into condos in order to capitalize on the increased demand on first-time home owners.

But then something strange happens. People realize that buying a new home is starting to cost too much because the price is getting too high.

So guess what? They stay in their apartments, of course! Why would they do this? Because they realize if they have a decent apartment, they would be much better off staying in one place as their rent increases stay below the inflation rate than they would be in these times of bank rate increases and housing bubbles.

Now, of course, once this occurs, the demand on entry-level homes eases up because people start to realize they can get a better deal just by renting. But this easing of prices would have to drop precipitously in order to get people out of their rent-controlled apartments.

Now, because people won’t leave their rent-controlled homes and because no one wants to build rental units because they can’t make any money, who suffers but those wishing to move to Saskatoon, such as international immigrants. Also, poor people get screwed too if they want to move to a city that supposedly offers them opportunity. When immigrants and poor people arrive, they can’t find a place to live, placing increased pressures on social organizations.

So, there’s that.

And economic stagnation.

Rent control is an idea from those who are either too stupid or too ignorant to develop new ideas on their own. This idea has been tried, it has been found wanting, and anyone who brings it forward as part of an election platform ought to be mocked and ridiculed to the point of cruelty.

Then again, this is Dwain Lingenfelter we’re talking about here.

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  1. #1 by A Z R on February 23, 2011 - 11:06 am

    Mr. Huck,

    This is a great site. Thank you for adding me to your blog roll. Very proud to be included.

    Anyways, you have made fans out of the DB crew.

    Keep your stick on the ice.

  2. #2 by Rob Huck on February 23, 2011 - 8:49 pm

    Furthermore, I too think Peter Loubardias should be fired.

  3. #3 by cudgel on February 26, 2011 - 2:52 pm

    I’d like to stick a stick in Loubardias’s liver lips, damn he’s painful.

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