How can lowering rent help the community?
please explain and give examples
Answer:
Lowering rent reduces the number of people who can't afford somewhere to live and lets those who are already renting spend more on other goods and services, thereby expanding other sectors of the economy.
However, (there is always a 'however' with economics) these impacts will only exist in the short to medium term (say 1 to 5 years).
In the longer term, lower rents will mean that landlords have less incentive to build new houses to accomodate a growing population since if they are receiving less on the houses they are renting to others, then they will choose to invest their money in other things. Therefore, over-time, you will get a shortage of rental accomodation and tenants will compete with each other for the available houses by offering to pay more and thus market forces will puch rents back up again.
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Answer:
Lowering rent reduces the number of people who can't afford somewhere to live and lets those who are already renting spend more on other goods and services, thereby expanding other sectors of the economy.
However, (there is always a 'however' with economics) these impacts will only exist in the short to medium term (say 1 to 5 years).
In the longer term, lower rents will mean that landlords have less incentive to build new houses to accomodate a growing population since if they are receiving less on the houses they are renting to others, then they will choose to invest their money in other things. Therefore, over-time, you will get a shortage of rental accomodation and tenants will compete with each other for the available houses by offering to pay more and thus market forces will puch rents back up again.
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