Stuart tells his student government representative at his college to propose rent controls on local rental housing as a way to help students afford rental housing. Maria disagrees with Stuart, saying rent controls will make students worse off. Who is correct and why

Both are correct in part. Rent controls will be better for the students who are able to find housing at the reduced price but worse for students as a whole because there will be a shortage of rental housing, a lower future supply, and the quality will deteriorate.

Explanation:

Rent control involves use of price regimes such as price floor and price ceiling to control the cost of rent by the government.

Price ceiling is the maximum price allowed for rent while price floor is the minimum amount a property is allowed to be rented out.

The aim of rent control is to make housing cost cheap for everyone.

So both Stuart and Maria are correct. Rent control will make housing affordable for the students.

However when unfavourable rent ceiling is imposed by government, suppliers always aim to make profit and will refuse to give property out for rent. Resulting in shortage of rental housing, a lower future supply, and the quality will deteriorate.

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