Labour’s Rent Controls Will Worsen Housing Shortage In Chch
Labour’s Rent Controls Will Worsen Housing
Shortage In Christchurch
Press Release by ACT Leader John Bank
Wednesday, September 11 2013
Labour leadership hopeful Grant Robertson’s proposed rent controls in Christchurch will create turmoil in the housing market and do nothing to assist with the Christchurch recovery, ACT Leader John Banks said today.
“Rather than helping those wanting to rent, artificially restricting prices will make it harder for them to find a home,” Mr Banks said.
“When housing is limited it must be rationed. Higher prices create an incentive for people to make houses and rooms available for renting. It encourages renters to economise by taking less space – e.g. boarding, shared flatting or no spare bedroom. This makes rented accommodation available to more people.
“Lower rents imposed by rent controls increase demand for space and reduce the incentive to meet that demand. This will make the rental housing shortage worse. It will hurt those who are looking to rent the most and their desperation will make illegal under-the-table payments inevitable.
“Rent controls will also reduce the quality of rented accommodation in Christchurch. As landlords are restricted in the rents they can charge, they will be less likely to repair and upgrade their properties. When price goes down, quality goes down.
“Mr Robertson knows that rent controls are destructive. That’s why his proposal excludes new homes. He knows that it would stall new development.
“The outcome of rent controls will be a shortage of supply and poorer quality homes, neither of which will assist with the Christchurch recovery,” Mr Banks said.