Rent control
Topic: Markets, Equilibrium and Government Intervention · NCERT: Class 12, Ch 5 "Market Equilibrium"
Meaning
Rent control is a price ceiling on housing rents: a legal maximum rent set below the market rate. The aim is to protect tenants from high rents. Like any binding ceiling, it creates excess demand, meaning more people want rented homes than are offered. Landlords earn less, so they spend less on maintenance and may take flats off the rental market. The result is a housing shortage and run-down buildings.
Example
The old rent Acts in Mumbai and Delhi froze rents for decades. Landlords stopped repairing buildings and kept flats empty, so fewer homes were available to rent. To revive rental housing, the Centre issued the Model Tenancy Act 2021. It sets up a Rent Authority, Rent Court and Rent Tribunal, and caps the security deposit for homes at 2 months' rent.
Don't confuse with
- Model Tenancy Act 2021: it does not freeze rents. It lets landlord and tenant agree the rent, and focuses on written agreements, quick dispute resolution and a deposit cap.
Related concepts
- Price control
- Price ceiling
- Rationing
- Black market
- Hoarding
- Essential commodities
- Administered price