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What Rent Should a Rent Tribunal Set? Some Simple Analytics of Rent Decontrol
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As deregulation takes place in the UK, rent tribunals are
confronted with the problem of setting a “market rent” for
previously controlled property. A simple partial equilibrium model of a
sector of the rented accommodation market is used to examine the
question of setting a “market rent” in the controlled‐rent
subsector. It is shown that setting the controlled rent equal to the
rent prevailing in the uncontrolled part of the market is sub‐optimal,
and a simple formula is suggested which will give a better estimate of
the true free market rent.
Title: What Rent Should a Rent Tribunal Set? Some Simple Analytics
of Rent Decontrol
Description:
As deregulation takes place in the UK, rent tribunals are
confronted with the problem of setting a “market rent” for
previously controlled property.
A simple partial equilibrium model of a
sector of the rented accommodation market is used to examine the
question of setting a “market rent” in the controlled‐rent
subsector.
It is shown that setting the controlled rent equal to the
rent prevailing in the uncontrolled part of the market is sub‐optimal,
and a simple formula is suggested which will give a better estimate of
the true free market rent.
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