When the government restricts return on any particular asset, that asset will be allowed to deteriorate until its value is low enough that it earns an acceptable return. If there is no value low enough, the asset will, one way or another, end up in the government's hands and become a burden on taxpayers. Whoever used the old saw "market failure" earlier in this discussion has successfully memorized a popular socialist catch phrase but does not appreciate the law of unintended consequences. If you force landlords to rent units at below market rents, the affected housing stock will slowly deteriorate. The remaining housing stock becomes prohibitively expensive, and new renters find it difficult or impossible to get into the below market units. The below market units effectively become a one-time property transfer from landlords (who actually took risk in buying and spend money for upkeep and repairs) to whoever had the dumb luck to be in a controlled apartment when the rules took effect. The controlled housing stock is tightly clutched in the hands of a less and less deserving population until it has to be pried from their dead hands, while over time the people who actually need affordable housing stock find it impossible to find because everything that isn't being held until death is overpriced.
Quote of the Day
Copyright Brown - Brownstoner