Alex Tabarrok of Marginal Revolution University in conversation with Reuben Abraham, Vaidehi Tandel, Kshitij Batra of IDFC Institute to discuss the housing crisis plaguing Mumbai as a consequence of the draconian rent control act.
"Let’s take a look at the consequences of rent control in Mumbai, where many tenants are paying for their flats at 1940s rates. If a landlord receives a few hundred rupees per month for large flats that, on the market, should be renting at 100,000 rupees, this greatly disincentives making necessary building repairs. The landlord may not even be able to afford the taxes on the building, not to mention the upkeep. When you have enough rental situations like this, it can lead to a crumbling city – quite literally. Occupied rent-controlled buildings have been known to suddenly collapse."
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