Kamala Harris wants rent controls (or a version of them) imposed on “corporate” landlords (owners of more than 50 units). If this is a reiteration of the original Biden-Harris plan (it seems to be), this regime would “include an exception for new construction and substantial renovation or rehabilitation.” But, as I noted here, singling out “corporate” landlords sends a signal to such landlords that they are designated bad guys in the Democratic narrative. That’s not an incentive to invest in the sector or to believe that any exemptions in respect of new construction will last for very long.
Meanwhile, via Bloomberg:
Ireland’s rent controls are deterring overseas investors in the local residential real estate market and keeping out billions of euros, according to a study by CBRE Group Inc.
Only one forward structured residential transaction — in which an investor agrees to buy a development early or mid-construction stage — has been reported since the start of 2023, the property broker’s research arm said in a report Wednesday. That compares with forward commitments that formed the bulk of the €9.5 billion ($10.6 billion) injected into the market by institutional investors between 2018 and 2022, it said.
I am shocked, shocked by this news.
Writing for CapX in May, Kristian Niemietz referred to a meta-study on rent controls recently published by the Journal of Housing Economics. Among its findings:
Out of 16 studies that concentrate specifically on the impact on supply, 12 studies find a negative one.
Out of 16 studies that concentrate specifically on the impact on housing construction, 11 find a negative one.
And yet still the rent-control proposals come. One key reason why is that the political return to the politician proposing or introducing the controls usually outweighs the political cost of the economic damage (including to would-be renters) that rent controls bring in their wake.
Politicians respond to incentives.