Rent Growth Control and the Transition of Land to Urban Use

  • Alastair McFarlane
Part of the Applied Econometrics Association Series book series (AEAS)


The notion that a rigid price-ceiling discourages investment in rental housing has led to the introduction of more flexible rent controls over the past few decades. What distinguishes this ‘second generation’ of rent regulations is that the upward adjustment of rents is allowed to account for inflation and other costs of holding residential real estate. Another characteristic that is common among these dynamically oriented rent controls is that the initial contract rent is not subject to regulation. It is only the growth of rents that is regulated. Yet, in much of economic theory, the static rent ceiling is still used as a benchmark case. Arnott (1995) has called for additional conceptual work to fill this void. It is the purpose of this chapter to make a small contribution to the understanding of how the construction of urban housing may be affected by a flexible rent ceiling.


Real Interest Rate Central Business District Market Rent Vacant Land Rent Control 
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© Applied Econometrics Association 2003

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  • Alastair McFarlane

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