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Generating returns in spite of the Rent Control Act

Last response: in News & Leisure
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October 20, 2011 10:15:57 AM

There are few empirical studies regarding the effect of the Rent Control Act on the housing market in Cochin. It is generally agreed that the original social objectives of the legislation have not been realized. On the contrary, a number of adverse economic effects of rent control are witnessed in varying degrees in this city.

These include:
- Accelerated deterioration in the housing stock, as landlords lose interest in the maintenance of buildings
- Withdrawals of vacant premises from the rental market by the landlords due to the fear of losing the property
- Emergence of the parallel economy in housing market through the payment of key money
- Reduction in mobility of households and inefficient land use in core areas with concentrations of rented premises
- Stagnant municipal revenues as valuation of properties is related to standard rent
- Reduced investment in rental construction due to the perceived low returns on investment

In Cochin Apartments located in the vicinity of the Infopark and the up coming ‘Smart City’ are likely to witness more demand both from customers intending to own an apartment and also from the high salaried Information Technology (IT) professionals. Already the rentals for individuals and the apartments have gone up phenomenally in spite of the global economic crisis. It seems that the Rent Control Act has been thrown to the winds in this hot destination when the rents being charged for a single apartment is considered. Only the high salaried IT professionals can afford such amenities and the middle class people can never even dream of reaching anywhere near.
October 20, 2011 1:32:54 PM

Had to find out where Cochin was (India). You are seeing the same kind of problems that rent control in New York City caused years ago.
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