Re:Stanford paper says rent control is driving up cost of ho...
by JamesBarney on Tuesday January 09, 2018 @01:53AM
(#16104146)
In commercial real estate there are two types of contracts.
I agree to rent this place for a year.
I agree to rent this place for a year, and I'm paying for the option to re-rent it at the same rate for the next 5 years.
You can imagine that in commercial real estate one of these contracts is more expensive per month than the other. Especially in markets with rising rents.
Basically rent control bans the first type of contract, and requires the second. And therefore increases rental rates.
I agree to rent this place for a year.
I agree to rent this place for a year, and I'm paying for the option to re-rent it at the same rate for the next 5 years.
You can imagine that in commercial real estate one of these contracts is more expensive per month than the other. Especially in markets with rising rents.
Basically rent control bans the first type of contract, and requires the second. And therefore increases rental rates.