Originally published in Bangor Daily News on June 27, 2023.
On June 13, Portland voters rejected a change to the city’s rent control ordinance. The now-rejected change would have removed a cap on the amount landlords may increase rent after a unit is voluntarily vacated by a tenant. As rent control continues to expand nationwide, I’m afraid more municipalities in Maine will follow Portland’s lead in implementing and maintaining rent control. From an economic standpoint, this decision would be a mistake.
Rent control is a legally established maximum price applied to the market for apartment rentals. In economics, we refer to this legally established maximum price as a price ceiling. A price ceiling is considered binding when it is set below the market price. In economic theory, a binding price ceiling is bad because it prevents supply and demand from reaching equilibrium, which leads to a shortage in the market.