Housing activists have long called for the government to de-commodify housing—they want to remove profit from rental housing. A current effort to institute this policy has housing activists calling for the Federal Housing Finance Agency to institute national rent control for housing financed by the agency.
In an opinion piece on The Hill, activist Tram Hoang writes:
The federal government must build on the efforts of the nation’s cities by instituting a national rent control policy. America is increasingly becoming a renter nation yet rent remains unaffordable for millions…
In the past three years, more jurisdictions have passed new or strengthened pre-existing rent stabilization laws through ballot measures.
Hoang supports a proposal to limit rent increases to 3 percent per year, an amount that doesn’t even keep pace with inflation. Not only does Hoang want to remove profit from rental housing, she supports making landlords lose money.
One doesn’t need an MBA to understand that such a policy would provide no motivation to landlords to maintain or retain their properties. Nor would it provide motivation to housing producers to build more housing. Such considerations aren’t even on the radar of housing activists. They see a problem today and want a solution today, no matter the long-term consequences.
Rent control undeniably helps some renters—those who can find rent-controlled housing. However, when their housing needs change, as they do for most people, those tenants will find fewer housing options available.
One need only examine the economies of communist nations for examples of what happens when profit is removed from the production of any value. With the potential for profit removed, there is no incentive to produce more than one can consume. This is true of agriculture, manufacturing, and every other industry, including housing.
Removing profit from rental housing won’t solve the housing crisis. Freeing housing producers will.